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Sallie Krawcheck: 'Not too big a surprise' that financial products are built for men
The pandemic-induced recession and broad economic shutdowns hurt America's female workers in particular and widened the gender wealth gap. Making matters worse for women, financial products that might otherwise help them save and invest are typically built for men, according to Sallie Krawcheck, the founder of Ellevest, a female-focused investment platform.
“Probably not too big a surprise that an industry in which 86% of financial advisers are men, 90% of traders are men, 98% of mutual fund managers are men, 99% of investing dollars are managed at companies run by men — they default to men,” Krawcheck told Yahoo Finance during a wide-ranging discussion last week at Verizon's #Next20 series. (Verizon is Yahoo Finance's parent company.)
On Tuesday, Ellevest said it had reached $1 billion in client investments.
Krawcheck started the platform in 2016 several years after serving in high-profile roles on Wall Street — including as CEO of Citi Wealth Management and CEO of Merrill Lynch Wealth Management, part of Bank of America. Krawcheck was ousted from the Merrill Lynch post after just two years and has spoken out about the Wall Street "boys club."
Speaking to Yahoo Finance, Krawcheck said male-dominated financial products help perpetuate the gender wealth and earning gaps. Investing algorithms, for example, almost exclusively base recommended savings and investments on average lifespan — which differs for men and women.
“Totally great if you're a man because you earn more, and I'm sad to say, you die sooner. Really terrible if you're a woman because you earn less, you take more career breaks, your salary peaks sooner, and you die later, so you have a chance of running out of money,” Krawcheck said.
'Don't buy the latte'
And financial media isn’t doing women many favors, according to the former Wall Street executive.
“There's no female money media to speak of,” she said, stressing that when traditional and newer female-focused news outlets do tackle women’s financial matters, two‑thirds of the content conjures negative associations with money, laden with assumptions that women view investing as a major, unapproachable hurdle. The other third, she said, is either patronizing or guilt-inducing.
“Don't buy the latte. Don't buy the facial. Don't have the pedicure,” are common themes published by media outlets to impress upon women choices that can help them attain financial freedom, Krawcheck said. “You never hear: Don't buy the tool chest.”
“And so we speak in these gender terms around money, where for him it's, power, strength, abundance. And for her, it's isolation, uncertainty. And it's to the point where there is no amount of money she makes that she doesn't feel ashamed of,” Krawcheck said.
While some research has shown that female investors outperform male investors, that alone probably isn't enough to level inequities.
According to Payscale and the National Committee on Pay Equity, in 2020, U.S. women working full time earned median salaries approximately 81% to 82% of what men earned. Adjusted for working the same job with the same qualifications as men, Payscale says women’s earnings adjusted to 98% — a figure that hasn’t budged in five years.
Payscale’s data shows that in 2019 women of color working full time earned 75% what white men earned. Adjusted for working the same job with the same qualifications as white men, Black women earned 97%, Hispanic women earned 99%, and Asian women outpaced white men earning $1.02.
And for all the talk about the gender pay gap, Krawcheck said, there’s been too little conversation around the gender wealth gap, which in 2016 equaled about 32 cents to a white man’s dollar.
“It's only a penny for Black women, a penny for brown women, and we know those numbers are outdated,” Krawcheck said, “and they're worse now with the pandemic.”
Over a lifetime, the pay differences, longer average lifespan, and income that women often forego for child and family care can pressure them to work longer and save less.
“For some women, it's tens of thousands of dollars they've missed out by not investing. For many women it’s hundreds of thousands of dollars," Krawcheck said. "And for some women, millions of dollars."
In honor of Verizon's 20th anniversary, the company's #Next20 series features in-depth conversations with global thought leaders and change-makers on racial, social, environmental, technological and business issues that will define the next 20 years.
Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney.
Follow Alexis Keenan on Twitter @alexiskweed.
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