Krawcheck is frustrated by a male-dominated industry she says has a blind spot for women
Sallie Krawcheck wants to see a particular brand of feminism in 2017. She calls it “financial feminism.”
Former Wall Street standout Krawcheck, who was vocal about the intersection of politics, money and culture throughout the presidential campaign — she told an interviewer before the election that Donald Trump’s candidacy could be “one of the best things that’s ever happened for feminists” — hasn’t changed that tune in 2017.
Earlier this month, with Trump’s inauguration nearing, she wrote to members of digital investment advisory service Ellevest that women “control $5 trillion of investible assets, jointly control another $6 trillion of investible assets and make up half of the workforce. And today we have more options than ever for using that power.”
Krawcheck is CEO and co-founder of Ellevest, which she aims to grow by targeting women, raising their financial profiles in the meantime. She is also promoting a book, “Own It,” released Jan. 17, that merges her personal experience with viewpoints on feminism, work, and how the financial services industry should serve women.
In conversations with MarketWatch, she expressed frustration with a male-dominated industry she says has a blind spot for women, tailoring messaging and products to men. An example: product descriptions that focus on how they “beat” or “outperform” the market rather than build wealth.
“Women would like to make sure there is enough money to pay for [their child’s] college, and not whether their portfolio is doing better than somebody else’s,” Krawcheck told MarketWatch. “It’s not a coincidence that an opportunity like Ellevest exists.”
Krawcheck grew up in Charleston, S.C., a straight-A student whose obsession with grades helped her earn the University of North Carolina at Chapel Hill’s prestigious Morehead-Cain Scholarship. But when she graduated, she first aimed for journalism, not finance.
“I tried to get a job at Time magazine,” she said. “They would not give me one, so I applied for a job on Wall Street.”
Krawcheck eventually cut her Wall Street teeth at Salomon Brothers, briefly overlapping with Michael Lewis, who later described his tenure there in “Liar’s Poker.” (In the book, Lewis describes scenes of misogyny and sexism at the firm; Krawcheck does the same in hers.)
Krawcheck quit after three years to pursue an M.B.A. at Columbia University. At a commencement speech some two decades later, she told the crowd about the rejection letters she received after applying for Wall Street jobs — three, she recalled, just from Lehman Brothers — upon graduating from business school.
She accepted the only offer she got, covering the life insurance industry for Sanford Bernstein “for half of my old salary and at a lower level of seniority.”
Then she began to climb, earning acclaim as she progressed: When she was appointed CEO of Citi’s C, -1.27% new Smith Barney unit, Time listed her in its 2002 list of “Global Influentials.” Fortune named her Most Influential Person Under the Age of 40.
She became CFO of Citigroup in 2004 and CEO of Citi’s wealth management business in 2007.
Krawcheck, now 52, was fired from Citigroup in September 2008 over an argument with then-CEO Vikram Pandit in which she felt the company should compensate clients who lost money after following the bank’s investment advice.
She contemplated a move to regulation, with stints as a consultant working with leaders in Washington, D.C., in the wake of the financial crisis. But in 2013 she bought 85 Broads, a network of professional women that aims to “help women advance in the workplace, both for themselves and the greater good” and is now called Ellevate.
With a background in financial services and a passion for improving women’s financial lives, Krawcheck says it was natural for her to start a digital adviser geared specifically toward them. Ellevest officially launched in May.
And she views her high-profile firings as part of the life of a Wall Street executive. At a conversation with Columbia students not long after her dismissal by Moynihan, she answered questions about banking, the financial crisis, women on the Street and her career without euphemisms or jargon. “Life,” she said, “goes on.”
Krawcheck, a prolific writer, speaker and social media maven, understands the power of the message. She writes regularly for news sites, her columns are widely shared via LinkedIn, and Ellevest clients regularly get her missives on personal finance, feminism and tips on how to ask for a raise.
It’s 2017. Why do we hire for diversity & then coach them to conform to the majority? There’s a better way. #OwnIthttps://www.linkedin.com/pulse/its-2017-why-we-still-telling-women-act-like-men-work-krawcheck …
It’s 2017. Why are we still telling women to act like men at work?
You may be familiar with some of the research on the power of diversity in driving company performance: that more gender diverse leadership teams can lead to higher returns on equity, lower risk,
She asserts that a lack of gender diversity on Wall Street is a big reason the financial services industry doesn’t serve women as well as it should. The industry has also noted this: In a 2014 white paper, CFP Board CEO Kevin R. Keller wrote that “the needs [of consumers] will go unmet unless the population of CFP professionals more closely reflects the demographics of the public they serve.”
Only 23% of financial advisers with the Certified Financial Planner designation are women, according to Cerulli Associates, a research firm that specializes in global asset management.
Meanwhile, women control more than half of U.S. personal wealth — but an average woman’s retirement account is just over half that of an average man’s, according to BMO Wealth Institute, partly because women earn less during their lifetimes, accumulate more debt, live longer and suffer more financially after divorces.
Women are also more likely to take career breaks to start a family or care for a family member, something Krawcheck says comes with a price tag higher than many realize — and that they often neglect to calculate, with unforgiving consequences.
According to the Center for American Progress, a nonpartisan policy institute, career breaks of just a few years can cost a worker hundreds of thousands of dollars due to a combination of lost wages, lost retirement, lost Social Security contributions and lost future wage growth.
“If you are earning $85,000 a year, and want to take a 2-year career break, most women assume the cost of such a break is $170,000,” Krawcheck said. “The right answer is it’s more than a $1 million.…When you calculate the true cost of a career break, you might just want to get a babysitter. The worst decision you make is to make a decision with poor information.”
Career breaks — and other decisions, such as failures to ask for promotions or raises — lead to financial gaps that leave women at a disadvantage, according to Krawcheck, who says she wants to help women make choices that put them on a stronger footing.
“I believe this fully and have seen it in action: Money is power, and women will not be fully equal with men until we are financially equal with men,” she said.
Ellevest is a robo adviser designed specifically for women, taking into account likely gaps in pay and investment in recommending products and strategies. Rather than offering only a choice of portfolios in which to invest, Krawcheck says, “we put together a full financial plan together based on a woman’s goal,” combining data including their education, age, salary, ZIP Code and assets.
Their software also estimates the effect of career breaks on their planning. “We often have to deliver bad news to investors,” she said.
Members can buy investment products directly through Ellevest or use the advice with their own advisers. When customers appear to fall behind on savings goals, Ellevest nudges them to get back on track, telling them how to adjust.
Ellevest is now available to anyone with a computer and a bank account. It is still relatively small, with 1,800 clients and $9 million under management, according to a Jan. 5 regulatory filing.
Krawcheck wants Ellevest, which has secured $19 million in funding, to become the go-to place for investment advice for women. She hopes to do that in part by distinguishing Ellevest from what she thinks is a mistaken stereotype of the robo adviser. “I’ve never been a fan of the term,” she said.
While individual clients’ investment needs and goals are analyzed by computer, she says, the products offered are hand-picked. (In Ellevest’s case, the hand belongs to Chief Investment Officer Sylvia Kwan, who has a Ph.D. in engineering economic systems from Stanford University and manages her family’s $22 million for Simply Smart Asset Management.)
“I think it’s dismissive of what these digital investment platforms do,” Krawcheck said. “The sense feels like there is no human engagement.”
But she also says the ease of using automated platforms helps all investors get started and choose products that meet their goals — and says Ellevest goes further by using terminology that is jargon-free and geared toward individual goals.
That, she hopes, will help customers overcome conditioning that tells women personal money management is man’s business — which cost them money if that leads them to put off investments.
“Wealth management in the U.S. is a $30 trillion industry, Krawcheck said. “Firms that provide value and differentiation are capable of massive scale and impact.”
Still, their success — as is the case with any adviser — will ultimately be determined by their ability to attract clients. Morningstar senior equity analyst Michael Wong believes that with their current fee structures, robo advisers need between $16 billion and $40 billion in assets under management to break even. (Morningstar is an investor in Ellevest.)
Betterment and Wealthfront, two early robo advisers, have about $6 billion and $4 billion, respectively. Their growth slowed when giants Vanguard and Schwab decided to offer their own platforms at even lower fees.
Ellevest’s fees, meanwhile, at 0.5% of assets under management — which are in addition to the expenses associated with whatever products you buy — are higher than what some rivals charge, though lower than a traditional adviser’s fee.
“People are telling me: ‘There are so many digital advisers, you can’t be successful,’” said Krawcheck. “But we have a gender investment gap. If women invested at the same level as men, I’d be doing something else.”
Lady Gaga just wants to dance, but might previous bad romances with insurance providers prove her downfall?
Gaga, who will headline the Super Bowl halftime show on Feb. 5, reportedly intends to perform on the top of the dome that covers the NRG Stadium in Houston. According to the New York Post, event organizers are trying to figure out how to get her up there safely, while also having heart palpitations about what insuring her stunt might cost. (Gaga’s representative didn’t respond to a request for comment, but the 30-year-old entertainer has teased fans with Instagram posts that show her preparing for the show from a tented dance floor in her backyard.)
Most of the insurance companies would probably say “no way” to covering such a stunt, says Tim Gaspar, owner of Los Angeles-based insurance agency Gaspar Insurance Services. “Insurance companies are not in the business of taking risks, though it seems like they are.”
The upside for daring policy providers is the higher premium they can charge. Gaspar estimates that Gaga’s daredevil impersonation would likely run the show’s producers between $100,000 and $200,000 in insurance fees. Even then, the least risk-averse insurers still won’t cover Gaga if she decides to just get onto a helicopter and jump onto the stadium’s fabric roof.
If Gaga hasn’t decided how exactly the event would be carried out, that would also pose a challenge to insurers. “We usually get information about the show long in advance so we can work with creative,” says Susan McGuirl, head of the North America entertainment division at insurer Allianz Global Corporate and Specialty, noting that everyone from weather forecasters to local health and safety authorities “interact to ensure anything like this goes off appropriately.”
Gaga’s audacious move to reportedly sing from the rooftops would be a break from last year’s half-time show, when headliners Coldplay were panned for being too tame. And while Beyoncé’s “Black Lives Matter”-inspired cameo grabbed headlines, it was seen as too political for one of the few mass-televised events left.
One of the problems with Gaga’s potential stunt is that there’s little actuarial history of what happens when an entertainer of Gaga’s repute performs on a rooftop. Gaspar estimates that an insurer for a less risky Super Bowl Halftime show would likely charge about $40,000 for the approximately 30-minute event, with feet-firmly-on-ground headliners costing $12,000 for $1 million in liability. The biggest concerns for insurers are usually cancellations due to the weather or workers’ compensation, all of which insurers have plenty of data on and can price into their policies.
In-air performances and coverage of esoteric items like celebrity body parts are an entirely different story. Only so-called surplus line insurance providers, which operate out-of-state and whose fees aren’t capped by local regulations, are likely to offer such policies. A syndicate of Lloyd’s of London, the insurance marketplace that is known for covering celebrities’ body parts, is a likely candidate to offer a quote for such a policy, industry insiders say. Allianz, which has covered the Super Bowl halftime show in the past, is also a big player. (Lloyd’s wasn’t available for comment.)
Gaspar, whose company insures events, says that daring agencies will require Gaga to follow the same safety regulations that apply to laborers working on skyscrapers. “They will require her to be in a harness and bolted to a structure 100% of the time,” he says. “And they will want to know who made the harness and what it’s bolted to.”
The NFL told Forbes last year that it doesn’t pay acts to perform, but only covers production expenses. It’s unclear if that includes insurance.
Of course, Gaga’s history with other insurers could make it harder for her to gain coverage. In 2010, Navigators Specialty Insurance Co. refused to pay out on Gaga’s $3 million policy when she was involved in a $30 million legal dispute with her pre-fame producer.
Ultimately, insurance companies like covering people with “no history of insurance claims that stay under the radar,” says Gaspar. “”Her history could make a challenging situation a bit more challenging.”
If you can change the way you think, you can change your brain.
That’s the conclusion of a new study, which finds that challenging unhealthy thought patterns with the help of a therapist can lead to measurable changes in brain activity.
In the study, psychiatrists at King’s College London show that Cognitive Behavioral Therapy strengthens certain healthy brain connections in patients with psychosis. This heightened connectivity was associated with long-term reductions in psychotic symptoms and recovery eight years later, according to the findings, which were published online Tuesday in the journal Translational Psychiatry.
“Over six months of therapy, we found that connections between certain key brain regions became stronger,” Dr. Liam Mason, a psychiatrist at King’s College and the study’s lead author, told The Huffington Post in an email. “What we are really excited about here is that these stronger connections lead to long-term improvements in people’s symptoms and overall recovery across the eight years that we followed them up.”
Cognitive Behavioral Therapy, or CBT is a psychotherapy technique that was developed in the ‘70s and is commonly practiced today. CBT targets depression, anxiety and other mental illnesses by helping patients to identify dysfunctional thought patterns and beliefs, and ultimately to replace them with healthy ones.
In the case of schizophrenia and psychosis, CBT can help patients reframe their thinking around unusual perceptions or paranoid thoughts ― for instance, the belief that others are out to get them.
“CBT helps people learn new ways of thinking about and responding to their difficulties,” Mason said. “What we think makes it effective is that people can take the tools they have learned and practiced in therapy, and then continue to use them long after the therapy has ended.”
In rewriting their deeply-ingrained thought patterns, it seems that patients also quite literally rewire their brains.
In a previous study, Mason and his team showed in a previous study that psychosis patients who received CBT had stronger connections between brain regions involved in accurate processing of social threats. The new findings reveal that these changes are enduring, and they may be critical to long-term recovery.
In the original study, patients with psychosis underwent brain imaging both before and after three months of CBT. The patients’ brains were scanned while they looked at images of faces expressing different emotions. After undergoing CBT, the patients showed marked increases in brain activity. Specifically, the brain scans showed heightened connections between the amygdala, the brain region involved in fear and threat processing, and the prefrontal cortex, which is responsible for reasoning and thinking rationally ― suggesting that the patients had an improved ability to accurately perceive social threats.
“We think that this change may be important in allowing people to consciously re-think immediate emotional reactions,” Mason said.
For their new research, Mason and his colleagues followed 15 of the original study participants, tracking their health over the course of eight years using medical records. At the end of the eight years, the participants also answered questions about their overall recovery and well-being.
The researchers found that heightened connectivity between the amygdala and prefrontal cortex was associated with long-term recovery from psychosis. The exciting finding marks the first time scientists have been able to demonstrate that brain changes resulting from psychotherapy may be responsible for long-term recovery from mental illness.
There’s a good chance that similar brain changes also occur in CBT patients being treated for anxiety and depression, Mason said.
“There is research showing that some of the same connections may also be strengthened by CBT for anxiety disorders,” he explained.
The findings challenge the “brain bias” in psychiatry, an institutional focus on physical brain differences over psychological factors in mental illness. Thanks to this common bias, many psychiatrists are prone to recommending medication to their clients rather than psychological treatments such as CBT.
“Psychological therapy can lead to changes in the mechanics of the brain,” Mason said. “This is especially important for conditions like psychosis which have traditionally been viewed as ‘brain diseases’ that require medication or even surgery.”
“This research challenges the notion that the existence of physical brain differences in mental health disorders somehow makes psychological factors or treatments less important,” Mason added in a statement.