A women-run company led by investing titan Sallie Krawcheck, known as "the most powerful woman on Wall Street," is taking on the ambitious role of narrowing the gender wealth gap.
"There have been two big drivers of wealth in our country: one of which has been real estate, which people of color have been redlined out of, the other of which has been investing," Krawcheck told CBS News' Michelle Miller. "And women and people of color have been kept out from that."
The gender wage gap between men and women in the U.S. has been the subject of debate and countless campaigns for equality, and that wage gap is even steeper for women of color. That wage gap, coupled with women taking more time out of their careers to care for children and investing less than men, means that even women who successfully saved for retirement could find themselves with as much as $1 million less in assets than their male counterparts.
"Women make 82 cents to a man's dollar. It's slowly getting better, but to be frank — it's decades away from closing for White women, 100 plus years for Black women, and 200 plus years for Latinx women," Krawcheck explained.
The disparity then leads to a long term gender wealth gap, or "how much money we keep" versus how much is earned.
"That gender wealth gap is 32 cents for a man's dollar, and just a single digit number of pennies for Black women," she said.
And unlike the wage gap, Krawcheck said the wealth gap is "moving in the wrong direction" and will take more than bigger paychecks to close.
She realized it would take more than larger paychecks to close the widening gap — so in 2014, Krawcheck founded Ellevest, a digital investment platform designed to get more money in the hands of women.
Ellevest, like other digital-first investing platforms, runs on an investing algorithm. What separates it from other apps, according to Krawcheck, is that it is "the only one that takes into account you're a woman."
"You might say, 'Why does that matter?' I'll tell you why, because we live longer, because we earn less, because our salaries peak sooner," she said. "So therefore, we keep less."
When the coronavirus pandemic hit and the economy took a downturn due to health and safety lockdowns, women were disproportionately affected.
Krawcheck pivoted Ellevest in response to the "she-cession." Now, a new membership on the platform gives women access to career and financial advisers, and rounds up extra change from charges into a savings account.
"We worked to keep the price very approachable — a dollar a month at the entry level," she explained. "This is the price of a portion of a latte a month in order to get the learning, the education, the ability to save more quickly, and eventually to invest early on."
Krawcheck, who rose through the financial industry to become the CFO of Citigroup and the head of its wealth management division, is no stranger to adversity herself, having entered the world of Wall Street in the early 1980s.
"When I was junior… they were just trying to run be out. It wasn't even hidden," she recalled. "There'd be Xerox copies of male genetalia left on my desk as a means of humiliating me, embarrassing me."
Today Krawcheck is focused on small steps other women can take to gain more money, more power and reduce their financial stress.
"While money is women's number one source of stress, the taking of action, right — the getting that credit card debt paid off, the investing, right, the having a plan for how you pay off the student loan debt, the building of savings — is the number one driver of her confidence in her future," she said.
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October 04, 2020 at 01:35AM
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