[Travis] Seeing yourself in your clients can help you connect, sure. But as new clients age into retirement planning, we need to adapt our approach to be more in-tune with different life experiences and different expectations. And no one knows that better than our guest today, Sallie Krawcheck. Welcome to "Rebuilding Retirement: Navigating a new reality with your clients," a podcast series from Allianz Life Insurance Company of North America. My name is Travis Walker and I've worked at Allianz for more than 15 years, from sales and relationship management to operations. Each episode of "Rebuilding Retirement" brings you thought leaders and innovators for a closer look at how retirements and the financial industry are evolving, new approaches to risk management, and how you can help your clients prepare for the future they want. Sallie Krawcheck is the CEO and co-founder of Ellevest, a digital financial platform for women. Historically, women have been underserved by the financial services industry. Sallie's work with women provides valuable insights into how we can expand our reach to a more diverse generation of clients. Ellevest has a community of more than three million women taking action with their money and more than $1.5 billion in assets under management. You'll hear Sallie's journey to founding Ellevest, why we need greater diversity in the financial industry, the impacts of technology on the business of giving financial advice, and why she hates the word "empowered." Sallie, thanks for joining us.
[Sallie] Thank you. Thank you.
[Travis] How did you find yourself in a career in the financial services industry?
[Sallie] Yeah, not on purpose. Let's say that. I was a journalism major in college and it was, at the time, one of the places where there were senior women, where when I looked up, I said, "That is someone that I want to be." Even at "Fortune Magazine" at the time, there were a number of senior women who were journalists. So I, that was my path. I was gonna be with Lois Lane, you know, of journalism. And when it came time to graduate, and when it came time to interview, the journalism jobs were paying $12 or $13,000 a year, but it was 1987 and the Wall Street jobs were paying $31 or $32, or even, dare I say it, $33,000 a year.
[Sallie] And I thought, well, that's quite a difference. Also, the Wall Street jobs were in New York, which growing up in South Carolina and North Carolina seemed like a pretty interesting place to go. Made even more interesting because my father told me I was not allowed to go there. Whereas the journalism jobs were in, you know, all over the country in sort of small and mid markets or where the jobs were available. So I switched my thinking and decided, I will go to Wall Street for a couple of years, I will learn, and then I will go back and become a journalist at a more senior level. And honestly, I tried, I, you know, worked at "Fortune Magazine" and "Time Magazine" in their business offices and kept try– I got a job offer at Disney, but unfortunately, my now ex-husband did not wanna move to LA where the job was. So I really did try to make it back into journalism. But after a while, when I became a research analyst, which yeah, some similarities to journalism, you know, the digging into the facts the ...
[Sallie] Looking to see things other folks don't see, the writing, the dealing with really intelligent people. By that time, I'm like, okay, I surrender. I actually love financial services and this is always where I was meant to be.
[Travis] No, that's good. Great answer, really comprehensive. And it's not unlike a lot of answers that I hear, well, I mean, obviously the journey's a little different, but the answer in that it's sometimes by happenstance with the financial services industry. Very few have that course charted initially, so.
[Sallie] Well, I have to say, I don't know that we in financial services do ourselves a ton of marketing favors in terms of really, you know, communicating the importance of what we do and the lives that we change for the better by doing it. As well as, and obviously, you know, I know I'm preaching to the choir here, but how intellectually interesting it is and the smart and kind, you know, people that you deal with in the industry and the kind people you deal with who are clients. We need a marketing campaign.
[Sallie] So that all young people will be running to this industry.
[Travis] Wanna delve into Ellevest. And rather than do it a huge disservice of trying to explain it myself, I'd love for you to kind of take the reins and tell us about it, how you decided to make something that was built for and by women. And then why was that important to create something for people who had, you know, historically been underserved in the financial services industry?
[Sallie] Well, you've hit the nail on the head. It's important to create something for people who've been historically underserved by the financial services industry. We sit here today when any number of wealth gaps are widening, racial wealth gaps, gender wealth gaps, that have very important and bad implications for our communities, for our society, for our families, for the companies that aren't getting started, for our nonprofits that aren't getting as much as they they could in contributions, for politics as well. Put another way, as we like to say at Ellevest, nothing bad happens when women have more money, absolutely nothing. And yet, women today have just 30 cents of wealth to a white man's dollar, for Black women, for Brown women, that's a penny, and it's been going in the wrong direction. We tend to talk about the gender pay gap as being a driver. It is, but there's also a gender investing gap as well.
[Sallie] That can cost some women as much as their gender pay gap does. So, I saw this really significant inefficiency, if you will, in the market, that women just don't invest as much as men do, even when adjusted for the pay gaps and the negative ripple effects it has and recognized at the time that the industry was saying, "Well, there is this gap, but it's because women are risk averse and therefore, there's really not a ton we can do about it." They never said those exact words, but that was sort of the approach. And at Ellevest we said, well, there may be something we can do about it if we build a company that centers women. And that does two years of in-depth research on not just, you know, women will say, "Well, I want someone I can trust," not leaving it at the surface level, but what are those things that we could do that will truly engender her trust? So Ellevest is today the number one, the only, I would argue, investech and wealth management company that centers women. We are funded by, founded by, built by, built for, investing through, investing in women with, again, as mentioned, a mission to get more money in the hands of women.
[Travis] But like you said, this, in the same way that we need marketing to get more people in the industry, we need marketing in terms of the verbiage and everything else. I've had discussions about people asking me to make the business case for, you know, diversity and--
[Sallie] You know, it is 2023, and some people who listen to this, maybe it's 2024. So, it does feel like there have been so many studies on the power of diversity, it's almost willful to ignore it at this stage, you know?
[Travis] Yeah, yeah.
[Sallie] Diversity in leadership has been shown to lead to higher returns by a little by, by a lot, not a little. Lower risk, greater innovation, greater employee engagement, greater client engagement. Diversity is so powerful that diverse teams outperform smarter teams. There's really nothing bad, nothing bad happens when women have more money. Nothing bad happens when we have diversity. It just means overcoming those old internalized beliefs, which is difficult to do.
[Travis] How do you hope, you know, that having more consumers of varying life experiences like women investing would impact the financial services industry?
[Sallie] Just open it up some more. You know, my old businesses, so back in the day I ran Merrill Lynch and I ran Smith Barney and the Citi Private Bank. These are businesses that do a lot of good for a lot of people. They have almost perfect product market fit with white men, middle-aged and older white men. When I was running these businesses, there was very, very little attrition. Men tended, when they chose a financial advisor, they stayed with that financial advisor. They left him when they died. They trusted him more than their doctor. Women, on the other hand, there is no product market fit. There has been none. And in the year after their spouse's death, women are likely to leave at a rate of 70 to 80 to even 90%. And by the time, you know, it gets to the next generation, the kids, 98% of the dollars are gone. So that tells me there is not product market fit there. And, if we keep doing things the way we do them, we'll keep having the same result. And so, what I'm hopeful is that, as these groups grow and as there's success in serving them, there's more expansiveness to who those target clients are. There's more diversity that's built into these businesses, which people are absolutely, absolutely working on right now, but that we see not steps, but leaps in this direction.
[Travis] Yeah. Can you elaborate on that? Because again, you've been intentional and unapologetic about your mission and what is that ultimately going to lead to when working with women and really elevating them with Ellevest?
[Sallie] Yeah. Well, look, we really work to respect our client base and respect who they are. And honestly, when we talk to them about what they're looking for in a financial planner or a financial advisor, they don't often say, it's a woman, it must be a woman. But we often hear characteristics that are, you know, really considered to be somewhat feminine characteristics. The caring, you know, questioning, watching after somebody, that sort of softness around the edges even when coming with the numbers and dealing with the numbers. And so we've, you know, we are, today, 100% of our financial advisors, of which there are only a handful to be honest, and 100% of our financial planners likewise are women. And they reflect our client base back to herself. So we are open for increasing diversity there. Our company overall is 85% women, 50% people of color. We are quite diverse. But for the time being, you know, the engagement with the client base is one of respect for her and reflecting herself back to herself.
[Travis] So, I had a question about platforms like Ellevest, but I want to amend that and just straight up say the platform that is Ellevest, because I don't know that there's anything necessarily like it.
[Sallie] There isn't.
[Travis] But how has that changed the landscape for financial professionals working with clients, especially when preparing for retirement?
[Sallie] Yeah. So, there really isn't another Ellevest. I was actually on the phone with a big investor, before this call, and he was noting that it feels like everybody has the same business strategy in the industry. Personalization, you know, high level of service, help you reach your goals, some impact investing, and Ellevest really stands apart because we are very clear. We are built by women and we are built for women. It does not mean we don't have men clients and do not welcome our allies in. In fact, in our private wealth offering, 40% of our clients are men. But we, rather than centering men, have centered women and women's needs.
[Sallie] So we certainly aren't seeing a rush to copy us. And I have a lot of views on why. It's mostly because what we're doing is incredibly hard. It takes quite a bit of capital, it takes quite a bit of time. And so this is not a, let me, hey, I'm gonna target women now, let me slap up a marketing campaign. That has uniformly, like uniformly 100% failed.
[Sallie] We changed the product.
[Sallie] We built a 3 1/2 million strong community from scratch. We built a brand that is on its way to becoming iconic around women and money from scratch. We built the product, which has to be as you know with startups, 10 times better than what's out there in order to, you know, garner new clients. And so, we had to have a strong tech team and tech stack, strong financial team and investing stack. In fact, it makes me wanna weep now. I'm like, it's been so much work. You know, we tried we've worked so hard. What I hope we've done though is change to some extent the dialogue around women and money. And by that I mean that women - men receive very positive affirmative messages around money from media and from society. The majority of articles on money or video, you know, video segments on money or shows on money for men are about growing wealth and building wealth and trading and Bitcoin and large-cap growth and small-cap value and this stock and this CEO, and very expansive, very affirmative. And so when men think about money, the synonyms that come to them are power, and strength, and independence. It's abundance. Women, it's the exact opposite, that the articles to women are about scarcity, about how difficult it is, about where they're failing. And so it's things like, financial planning doesn't have to be really, really hard. So it's positioned as a negative, or, and you know, we're coming into, we're coming into pumpkin spice latte season.
[Sallie] It's mocking women for their purchasing choices.
[Travis] Right, yeah.
[Sallie] Yeah, you know, don't buy the latte, don't have the facial, don't get a pedicure, Carrie Bradshaw with all of her shoes. It's all how it's her fault.
[Sallie] When in fact, what these articles should say is, "It's literally not your fault."
[Travis] Oh yeah.
[Sallie] Or, "You go girl, you are doing the best you can. And you know what? You go have that latte 'cause you deserve it." "And believe it or not, that latte is not gonna fund your freaking retirement the way some people say. It's just like the math, like literally does not work. So take a breath and be okay." And so we're seeing some changes to it now. We're coming outta the summer of Beyonce and Barbie and Taylor Swift, where women -
[Travis] That's right.
[Sallie] Sort of threw off that, you know what, I'm gonna have a little bit of fun and I'm gonna spend a little bit of money and I'm not gonna be shamed for it. And so if anything, where I hope Ellevest is changing the dialogue a bit is recognizing, you know, this difference in tone that lead women to think of money as isolating and uncertain and lonely, and beginning to say, "I'm going to step into my power."
[Travis] I would imagine that it's, you know, somewhat insulting for someone to say that then you have been empowered as if someone has granted you a right or given you permission to do the things you're doing.
[Sallie] Yeah, yeah. So you've hit the nail on the head. The reason I laugh at empower is because I've always disliked the word, always, and I thought maybe it was one of those overused words, like, you know, or phrases like let's circle back and, you know, quit hanging out and take a bead, and, you know, all the things that we say and I sort of thought it was just an overused word. But then we were sitting around one day at the Ellevest office and debating why we didn't like it and someone thought to pull up the online dictionary. And the definition of empower is to be given power. To be given power. To which, wait a minute, wait a minute, wait a minute. Women don't need to be given power. We are 51% of the population, 51% of the workforce. We direct 80 to 85% of consumer spending. We have trillions of dollars of investable assets and we don't have as much as the men do, but that's a lot.
[Travis] Yeah. It's not nothing.
[Sallie] It's not nothing. So we don't need to be given power, we need to find a way to use our power. You know, as for me, I'm incredibly privileged and incredibly fortunate that I was able to use my power to raise the funding for Ellevest to give us the time and the runway to build something that is unique and important.
[Travis] I think they'd look at some of your past jobs and say, well, it kind of speaks for itself, but rather than speak for itself, I'd love for you to speak up on it. Like, how do you get into that room and end up being the CEO and front and center at some of these really large institutions?
[Sallie] Yeah, yeah. I, when I was the, you know, ripe young age of 26, I think, I was still an investment banker. I was working at Solomon Brothers, I was in their London office, and one day after being asked to get the coffee for the men at yet another client meeting, looked up, so to speak, and realized I was a senior woman in investment banking at that time, at the age of 26. Huh. Wow. Okay, not a lot of role models on how to get from here to there, but I do want to be successful. I've always thought business is this, you know, deadly serious, but in addition, this, you know, sort of amazing game. So how can I get to the top if I choose to do it? And the answer for myself was a little bit of probably a surprising one, which is I decided I was going to stand out, that I wasn't gonna tuck my head, try not to attract attention, cross the street in a crowd. I think that works if you're part of the majority.
[Sallie] I'm gonna take the fact that I already stand out and take it up four times. Which worked really well when I became a research analyst. So, focus in on something that matters and sometimes it means you're quiet for a while 'cause you don't have anything to say, but if you are the one who's different, then, and you're good, then people have to talk to you and then you get promoted and you get titles and so on. And I found the same thing in business, which is be quiet if you don't have anything to add, which makes sure that when you do, people listen to you. And that's partly Ellevest, which is again, in a sea of, you know, people having a lot of the same strategy, Ellevest truly stands apart because–
[Sallie] I waited. You know, yes, it was that Ellevest, you know, we took two years after the founding to really get the offering right. What we're not talking about is the privilege that I had and the good fortune of the three years before that, before I even decided to launch in Ellevest, where I spent time really thinking through what the opportunities were.
[Travis] But if you had to give advice, I know we talked about marketing and how we can attract more people and how the industry kind of needs a refresh. For someone wanting to get into that and to grow their practice, just on a really practical level, what advice would you give that person, particularly women, that are gonna be in especially client-facing roles?
[Sallie] Yeah. I do think the call's a little bit different if you're in a client-facing role than in a leadership role. 'Cause you know, the big calls on big, big stocks and big opportunities doesn't necessarily work client-facing. People will be like, "What are you doing?" You know, look there, I think, you know, it is about often those characteristics that women tend to bring to relationships, which is the answering the questions, caring, really listening to the answers, actively listening to the answers. You know, encouraging additional questions, encouraging understanding, checking in on the person, not just financially, but as a whole person. You know, I felt, when I've met with my financial advisor, sometimes I feel like I've gone to see a psychologist after, because of course, money is not just money. Money is my future, and it's my family's future, and it's my hopes, and it's my dreams, and it's my fears, and it's power. You know, money is power in a relationship. I know we don't like to hear that, but it is.
[Travis] It is.
[Sallie] And so, bringing one's full self and caring, I think women are tremendously good at this. What, what I used to see at Merrill, by the way, is, and Smith Barney, the great, you know, financial advisors were often women. It took us longer to get started, that, you know, there was more of the sort of fee-based and less of the commission business. And so women would tend to get washed out earlier on. But once they made it through, that strength of the relationship was so, so key to their success.
[Travis] I wanna know, how has it changed, or what are the biggest changes you've noticed in the business of giving financial advice for retirement?
[Sallie] Yeah, yeah. Well, one thing I think has just been a and will be a long-run trend is technology coming in to do what technology does best and freeing up the individuals and the people in the business to do what they do best, which is for many of them relationships. And so at Ellevest, and that, this is by the way, been a move since, you know, calculators were first invented. You know, "Oh my gosh, I don't have to do the addition on this piece of paper any longer. I've got a slide rule and now a calculator." And then, you know, you know, here's a computer, it weighs 600 pounds and it's slow as hell, but you know, at least there's a computer. And so people in our industry have these big debates about people versus technology. It's like, "It's people and technology."
[Sallie] And it always has been. And so, you know, you really see the continuation of that where, you know, I think technology will do what it does and let people do what they do, and try not to confuse the two of them.
[Sallie] And that portfolio construction, of course, it's moving from portfolios that are simply about risk-adjusted returns to true goals-based, I mean which is what we do at Ellevest, true goals-based. You know, what are my chances of retiring with this kind of annual income if I make this kind of recurring deposit, or I make this one time," you know. Take into account, you know, the outside assets, et cetera, et cetera. So it's a movement to that which is beyond the capacity of the human mind, but it's also having the app on the run. You know, it's being able to connect with individuals the way they want, not the way that we are used to. In fact, I have one service professional who just continues to call me on my cell phone.
[Travis] Oh, lovely.
[Sallie] I just like, "Stop it!" You know, "Stop it," like, what do you, why do you think cell phones have text capability?
[Travis] Okay, I'll stop calling you, Sallie, and I apologize.
[Sallie] But it's so inconvenient. Can you believe we used to live with that? It's so incredibly inconvenient. It's intrusive. You know, I'm busy every day and you are imposing your timeline on me.
[Sallie] As opposed to sending me a text so that then I can determine when is the best time for me to connect with you, a service professional. You know, it's just, and then don't even get me started. The same individual has a fax machine.
[Travis] Oh, lovely. Yeah.
[Sallie] I think some people listening probably do. It's over people. It's like over. It's over.
[Travis] Well, that, that kind of speaks to what you're saying then about, you know, the generation that's coming ahead now and like, you know, their usage of technology or even ESG investing and the things that are important to them. Right? When you talk about a generation and the differences between these generations, how we did business before is not gonna be how people do business going forward, and what's important to certain people–
[Sallie] If you aren't staying up with that, then you're gonna lose a generation of investors. And I know it feels, I know it's scary to update and change the advice you give to clients or the answer to questions. I know that's scary, because if you today say, "You know what, I've taken a look at ESG investing and I do think it can make sense and I'm ready to offer it." Well, you know what if someone says, "Why didn't you do it last week? Why didn't you do it four years ago?" It's scary to change your mind.
[Travis] Sure, sure.
[Sallie] It's a sign of, you know, business maturity and growth overall to do it. So, I think we can fight these things, but you know, you lose business as a result of it.
[Travis] Well, it's kinda like you said, it's someone almost I imposing their will on something and not accepting things as they are and meeting people where they are. Particularly when you talk about women and their emergence, I mean, we were talking about this earlier and I had a thought that, hey, a lot of women are the CFO of their households. So to try not to deal with them or not actively find better ways to work with them, you do yourself a disservice, not just injustice to them. And so we're clear, no one needs to be empowered, you're just shorting yourself if you're not working with women.
[Sallie] Yeah. But it's also, we're all more comfortable working with people like ourselves.
[Travis] Oh, absolutely.
[Sallie] I mean, I'm more comfortable working with middle-aged women from the South, you know, who have careers in financial services. It's just easier. There's so much that just doesn't have to be articulated because we just understand each other. It is more difficult to work with people who are not like you.
[Travis] And thinking about that, how can people move past that or break through? Obviously they can use it to their advantage, but clearly you just can't work with only people that you're familiar with.
[Sallie] Yeah, natural curiosity. I think we all got into this business because we enjoy people and we enjoy meeting new people. And what's more boring than talking to people who are just like yourself all the time, who have the same points of view, who underscore what you believe? It's so much more interesting to me to learn something from people, change my point of view, engage with them. So I think, you know, the way to break through that, the sort of ease of being and working with people like yourself is just bring that natural childlike curiosity. You learn something from everybody.
[Sallie] From everybody. What is that thing you can learn so that you keep put, you know, the building blocks of an interesting life.
[Travis] Right, so if you were to restart your career again in 2023, how would that look different now that there is an Ellevest in place? And what advice would you give to that person starting out to a young Sallie Krawcheck?
[Sallie] Hm, that's a good question. You know, I might spend a little time in California.
[Sallie] Silicon Valley is still an area of new ideas and innovation and technology. And, you know, my regret is I don't know how to code. It's not something I learned. I'm gonna be honest with you, I keep buying the coding books and I'm lost by page two, which is why I've got a great technology team. By the way, they're lost on the, you know, investing hand, you know, instruction manuals on page two, too. But that is a regret that I have, or that's a direction. So I would go out to Silicon Valley to work for perhaps a series of startups for a couple years. I would then move back to New York because it is the center of the financial world and build a career that would have, you know, a strong foundation in tech and finance.
[Travis] Okay, so as we wrap up, just a few final questions for you. What does your ideal day in retirement look like? And I get the sense that you're far away from it. You're not a coaster, so you're gonna keep your foot on the gas here. But if you could close your eyes for a moment and think what your idea ideal day in retirement would look like.
[Sallie] Yeah, you know, it's a great question. I bore very easily, super easily.
[Travis] Me too.
[Sallie] Really do. In fact, over the weekend, I just like, I just have to take Saturday off, whole Saturday. I got a little, depressed is too strong a word, but a little blue.
[Sallie] What am I doing? What am I like sitting here on the sofa? And then on Sunday I woke up and you did, you know, put in a couple performance reviews, went to a lunch, got invited to a dinner. I just felt so much better. And so, retirement for me, I think is going to be probably a handful of boards and, you know, lots of time with my kids. But, you know, I'm still sort of the energy and the intellectual stimulation of, of going, of going.
[Sallie] I'm not too much of a beach gal.
[Travis] So, for the listeners who have enjoyed today's conversation, where can they find you online?
[Sallie] Yeah, well, you find Ellevest at Ellevest.com, E-L-L-E-V-E-S-T. You can find me on LinkedIn. That's where I do my social media. So come on, come on over and visit.
[Travis] Thank you so much for spending time with us today. I think that people will come away getting a lot from it. So what we learned from Sallie is that the needs of clients have evolved significantly. And a more diverse network of financial professionals will be uniquely qualified to understand the needs of their clients. To help the next generation of retirees, you'll need to meet clients where they're at. That means adapting your approach to address all aspects of retirement. Thanks for listening to "Rebuilding Retirement." I'm Travis Walker. Join us next time when we'll continue to explore the new retirement reality.