The world of financial services isn’t as gender-inclusive as it should be, and Wall Street insider Sallie Krawcheck is trying to change that.
“About the most powerful thing you can do to help a society and economy is get more money in the hands of women,” Krawcheck told CNBC’s Jim Cramer on Friday.
Krawcheck said she was at first skeptical about the need for an investing platform focused on women.
“Then the more I thought about it, when I realized, it doesn’t matter whether I think women need their own thing. The numbers were telling me that we do,” she said on “Mad Money.”
The vast majority of investment advisers are men — about 86%, according to Ellevest’s website.
And 98% of mutual-fund money is managed by men, Krawcheck said, “despite the research that tells you women are as good, certainly not worse, investors than men.”
While Wall Street prides itself on a strict adherence to data and improving returns, Krawcheck said it hasn’t yet “tapped into a really very powerful means of driving greater performance, which is cognitive diversity, which is often driven by diversity of gender, background, perspective, et cetera.”
“So here you have this, in theory, pure meritocracy that is not at all diverse,” she said.
Ellevest, which is valued around $140 million and uses ETFs for its clients, is tailored to the lives of women in small and large ways, Krawcheck said.
In more obvious ways, she said, Ellevest considers the longer life expectancy of women, which may necessitate a different investing strategy .
But in perhaps a less noticeable way, Ellevest noticed that “men would invest through verbiage jargon,” Krawcheck said, saying they might proceed forward despite not understanding a foreign term.
Women, on the other hand, are like, “Whoa, let me get out the old finance dictionary,” she said. “We have about a thousand little differences.”
Krawcheck said she knows that traditional investing platforms may suit some women “just fine.”
“But there is a big need there for an offering that is just focused on women,” she said.
Krawcheck said that the gender investing gap is costing women “hundreds of thousands, maybe millions of dollars.”
“You also care because for the next generation. There is not one of us, no matter how traditional you are, that wants our daughters to have less money than our sons,” she said.