00:00This is The Conscious Investor presented by Nuveen.
00:02I'm here with Sally Krawcheck, well known for her successful career on Wall Street,
00:06as a best-selling author, and as the CEO and co-founder of Ellevest.
00:10Can you talk to me about what the mission of Ellevest is?
00:13So Ellevest is pretty straightforward.
00:15It's a tech-enabled investing platform for women, and its goal is to get women more money.
00:22Money is power.
00:23The guys have more of it than we do.
00:25We will not be fully equal with the guys who we love, but we won't be fully equal with them
00:30until we're financially equal with them.
00:32We hear a lot about the gender pay gap.
00:34We've heard much less about the gender investing gap,
00:36which can cost some women as much or more as the gender pay gap.
00:40So having spent my career on Wall Street, recognizing this gap exists,
00:45which women sort of blame themselves for, we took a step back and said,
00:49let's build an investing platform completely around what women are looking for,
00:54go really deep on this thing, thousands of hours.
00:57And we found that we invest differently.
00:59We're more goals-based than guys are.
01:02We have different salary trajectories, different lifespans that have to be taken into account.
01:07There are a range of things which are leading to our success.
01:10And you recently launched a platform of impact portfolios?
01:14Exactly right.
01:14So the other thing we learned is that the significant majority of women,
01:19depends on the piece of research, but 86% of women, 84% of women, whatever,
01:24some big percent of women are interested in impact investments.
01:28Again, depending on the research, less than 10% of financial advisors
01:31have even spoken to them about it.
01:34So we saw a huge unmet need out there for impact investments.
01:37And what do your impact portfolios look like?
01:39Yeah, so ours are a little different from others.
01:42So we're providing them today.
01:44Let's talk about our digital platform in the form of ETFs.
01:49Up to about 50% of the portfolio can be impact, can't get higher because the market is still so
01:54new.
01:55Like other impact investments, we're all about earning a competitive financial return.
02:00Like other impact investments, we're all about advancing social and economic change for the positive.
02:06But unlike other impact investments, our means to the end, our way of doing it,
02:11is by getting money into the hands of women and advancing women and getting money to companies
02:16that advance women.
02:17What some might call gender lens investing, though with really a focus on getting real money to real women.
02:24And how do you identify companies that are advancing women?
02:27What does that look like?
02:28Yeah, so our underlying investments do that for us.
02:31So we have the Pax Elevate Fund, of which I am full disclosure, partial owner,
02:36and continued full disclosure.
02:38Make any earnings that I would have made from that will go to a nonprofit.
02:43So I don't get a benefit from it.
02:45And we also have the SHE Index as well, both of which are part of this.
02:49And for those, those companies, those organizations pick them at Pax Elevate.
02:54It's looking at percent of women on boards, percent of women in leadership teams, and then ranking them.
03:00So it's not, hey, they did this really interesting, you know, event with their diversity group or X, Y, Z.
03:08The interesting thing is, no, are the results there?
03:11And what the research tells us is that those companies that have greater diversity in senior leadership tend to have
03:18higher returns on equity, not by a little, by a lot, tend to have greater client engagement, tend to have
03:24greater employee engagement, tend to have a greater long-term perspective, tend to have more innovation.
03:29And so the thinking behind it is, those great things happen, those are good for the company, good for the
03:34markets, good for the economy.
03:36So it's not just about supporting women to support women, it's because there's also a financial payoff.
03:40Oh, my gosh.
03:41So, you know, now you're getting me started, right?
03:44So I just talked about the good things that happen when you have greater diversity in companies, but other great
03:50things that happen with women and money.
03:52If you give a woman a loan, she is more likely to pay it back.
03:56When she builds wealth from that loan, she's more likely, much more likely than gentlemen, to put it into the
04:01community and into her family.
04:03When she starts a business, we talked about, you know, when she's in management, when she starts a business, her
04:09startup typically does much better than male-only run startups in terms of the returns.
04:15When she has wealth, she gives a greater percent of it to nonprofits.
04:18So all these great things happen.
04:20Now, what I will admit, and one thing, so I've been on a journey with this myself, right?
04:24I was on the journey that was like, impact investments, don't you have to give up return, right?
04:29You know, got over that, and then, huh, getting money to women, that feels sort of niche-y and weird
04:35and strange, and why would that make sense?
04:37Okay, now I'm seeing the research.
04:38I guess I see it.
04:40But actually, we invest with a gender lens already.
04:45It's just we're investing in men, right?
04:47And we love men, we think they're amazing, but, you know, one of the key tenets of investing is diversification.
04:54And so rather than have 100% or 98% or 90% of the portfolio going to men, men
05:01-run companies, shifting a bit of it can add diversification, I believe.
05:05You have firsthand experience in working in an environment that is mostly men.
05:09What do you think is still holding the advancement of women back within corporations?
05:13Men?
05:14I mean, I think the answer is pretty clear.
05:20And it's not that they, it's not that CEOs don't get it because they get it.
05:26And it's not that people don't want to do it, they do.
05:30I believe it is that the way we have been socialized leads us to have intuition that is incorrect, that
05:39overrules the research we see about the positive effects of diversity.
05:43What do I mean by that?
05:45That when I look to hire somebody and she reminds me of myself, I just think she's amazing.
05:52And even you could say, hey, but the research, Sally, says you should hire somebody completely different.
05:56I'm like, yeah, but she's awesome, right?
05:58And I can think how she'll do the job.
06:00You know, another example, we tend to, as corporate America, promote men on potential and promote women and people of
06:10color based on what they've achieved, right?
06:13So there's actually a lower bar for individuals who are like those in power than there is for people of
06:20difference.
06:21So we don't even see this.
06:22But it's, again, because our intuition does not allow us to extrapolate, you know, for these people of difference what
06:29we can extrapolate for the majority.
06:30I could go on and on, but our intuition of those who are in power overrides what they see as
06:36the research on a day-to-day-to-day basis, you know, when they're making individual hires.
06:41And it seems that some of these biases, it's a lot of people have tried to reach women as an
06:45investment group before.
06:47But these biases sometimes feed into the products they create for women.
06:51What are some of your pet peeves about the earlier iterations?
06:55Well, none of them worked.
06:56And I think none of them worked because, number one, they identified the problem as a marketing problem.
07:04Women don't invest enough.
07:06We need to market to them differently.
07:09And by the way, while we're marketing to them differently, we need to tell them how to change, right?
07:14So we need to tell them that they need more financial education.
07:18And women will say, I think I need more financial education.
07:21Do you know what's more interesting than financial education?
07:24Everything, right?
07:26And so women, as the industry said, you need more financial education.
07:29We have a women's initiative that has financial education.
07:32Women would say, okay, they take the book home, they take the website home, and, you know, then doing the
07:37laundry is actually more fascinating.
07:40So it was really marketing, and it was about how to change some of it.
07:44In the early days was condescending.
07:45Don't buy shoes, invest in the market.
07:48It's about how to change some of it, probably because it went through the lens, not of women themselves, but,
07:52you know, of the male executives who were saying, this, you know, this is what I think women are looking
07:56for.
07:57They didn't attack the underlying issue.
07:59They assumed the product was fine, right?
08:02So the mutual funds are fine, the ETFs are fine.
08:05We'll just market them differently.
08:07And we at Ellevest attack the underlying offering.
08:11So, you know, we found that when women think about it, when men think about investing, they think about outperforming
08:18and winning and money and how much they can make.
08:20Women actually think about reaching their goals.
08:22If I invest, can I retire at the age of 65 well?
08:26Can I take the trip around the world in 10 years?
08:29Can I buy the house in five years?
08:32But when they go to some of the traditional offerings, they're thinking buy the house, and then they're met with,
08:38would you like a mutual fund or an ETF?
08:40Right?
08:40So it was just so out of sync for them that they stood back.
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