Ellevest Review 2018

ellevest team

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Invest Like A Woman Because Money Is Power” is the bold slogan that greets new users at Ellevest, a robo advisor designed by women for women. Founded by Sallie Krawcheck in partnership with tech entrepreneur, Charlie Kroll, Ellevest has a mission to get women invested in their financial futures and supports them in attaining their financial goals.

Ellevest offers two levels of service, Ellevest Digital and Ellevest Premium. Ellevest Digital is a fully automated robo-advisor service designed for the hands-off investor who wants Ellevest to manage her money without lifting a finger while Ellevest Premium is more like a hybrid robo-advisor service that is more customized to a client’s financial circumstances and involves human oversight.

Like most other robo-advisors, Ellevest relies on exchange-traded funds to build diversified portfolios and has substantially lower fees than most human financial advisors. On fees, it also comes up trumps when compared to many of its robo rivals.

Ellevest Spotlight

ELLEVEST SPOTLIGHT
ellevest logo

InvestorMint Rating

4.5 out of 5 stars

  • Ellevest Digital Fee: 0.25%
  • Ellevest Premium Fee: 0.50%
  • Maximum Funds Fee: 0.16%

via Ellevest secure site

Ellevest Features

Fees0.25% – 0.50%
Minimum Investment$0
Tax-loss HarvestingYes on all taxable accounts
Best ForWomen
Human AdviceYES
Portfolio RebalancingYES
401(k) AdviceYES
InterfaceWeb-based
Customer SupportPhone + Email
Automatic DepositsMonthly, Bimonthly & Quarterly

Ellevest Digital Vs. Ellevest Premium

Ellevest offers both a purely automated investment management offering as well as a higher tier of service, Ellevest Premium, for higher net worth clients who prefer human oversight and accessibility.

ELLEVEST DIGITAL

Ellevest Digital is a technology-powered robo-advisor designed for the hands-off woman who wants to invest her money in a diversified portfolio of exchange-traded funds at less cost than a traditional financial advisor would charge.

For a management fee of 0.25%, Ellevest Digital constructs client portfolios using a goals-based approach. For example, you specify financial goals, such as saving for a new home or buying a new car, and Ellevest will examine your timeline, savings, target amount, and capacity for risk to build a customized investment portfolio.

Personalized investment portfolios take into consideration other factors too, including your salary, expected salary growth, and assets in order to make portfolio recommendations.

As you get closer to the target date for your financial goals, portfolio recommendations become increasingly more conservative. This dynamic allocation adjustment over time that factors in a client’s changing capacity for risk raises the bar for all robo-advisors.

During our discussions with the senior team, this dynamic allocation feature was described as roboadvisor 2.0, and we wholeheartedly agree that it is in the best interests of clients to modify risk exposure as time goes by to reflect changing financial circumstances.

Where Ellevest shines also is in providing insight into how likely you are to meet your financial goals. Ellevest displays a 70% likelihood of meeting your financial goals, which compares favorably to the 50% benchmark figure used in the industry, so you enjoy a higher degree of confidence that you will achieve your goals.

ELLEVEST PREMIUM

For higher net worth clients who have a minimum of $50,000 in investable assets, Ellevest offers a higher tier of service for a management fee of 0.50%.

When you see what you get for this fee, you will realize it is highly competitive when compared to the costs and services provided by other leading robo-advisors.

As you might expect, Ellevest will build a diversified portfolio for you using a combination of the following securities and investment options:

  • Common stocks
  • Preferred stocks
  • Bonds
  • Municipal securities
  • Government securities
  • Mutual funds
  • ETFs
  • Unit investment trusts
  • Hedge funds
  • Alternative products

And like other robo-advisors, Ellevest does not attempt to time the market or make bets on specific assets, sector classes, or individual securities.

But where Ellevest Premium earns brownie points is:

  1. You receive 1:1 access to Chartered Financial Professionals for personalized guidance on finances and money growth strategies; and
  2. You receive 1:1 access to Executive Coaches for guidance on salary negotiations and career events.

These services distinguish Ellevest from most other robo-advisors because Ellevest emphasizes that men and women have earning trajectories that follow different arcs.

As a company that relies on data about where women’s salaries peak in general, Ellevest can better serve women by customizing financial guidance to their specific needs.

ellevest gender salary differences

While some robo-advisors have a cookie-cutter investment management services that serves men and women equally without factoring differing earnings arcs, which can lead to sub-optimal portfolio allocations and money strategies for women, Ellevest optimizes for an individual’s financial circumstances.

Both women and men can benefit from this deeper insight and more thoughtful approach to serving clients.

Ellevest Management Fees

Ellevest fees are tiered based on the level of service required and charged monthly in arrears.

The annual management fee for Ellevest Digital is 0.25%, and is charged on a monthly basis in arrears based on the market value of the average daily account balance of the securities portfolio in the preceding month.

Ellevest Premium fees are 0.50% annually and charged similarly.

  • Ellevest Digital: 0.25% annually
  • Ellevest Premium: 0.50% annually

Like most robo-advisors, these management fees are exclusive of fund fees that range from 0.06% to 0.16% annually.

Our research shows that these fund fees are highly competitive, an another reason why Ellevest deserves your serious consideration, whether you are a woman or a man.

Ellevest Investment Method

Ellevest uses low-fee ETFs to build diversified portfolios that are aligned with clients’ financial goals, time horizons and capacity for risk.

Ellevest astutely realizes that risk tolerance may not be the optimal gauge to assess an investor’s risk profile because when markets are rising investors often overestimate their risk tolerances and when markets are falling they underestimate their risk tolerance levels.

Instead, Ellevest focuses on capacity for risk as a better tool to incorporate the timeline of reaching a financial goal.

Upon learning what your risk profile is and having a better holistic understanding of your financial goals and time horizons, Ellevest uses low-fee exchange-traded funds, including many from Vanguard, to build customized, diversified portfolios.

ELLEVEST DIGITAL

Model portfolios are used by Ellevest Digital to manage clients’ assets. Ellevest allocates client monies to ETFs and cash equivalents on a discretionary basis using proprietary algorithms.

For each goal you set, Ellevest invests in a portfolio of ETFs using a method influenced by your time horizon, which you can change at any time.

Your accounts are monitored automatically, managed digitally, and rebalanced periodically according to the model strategy.

Rebalancing does carry a tax risk – for example, if winners are sold near year-end, the capital gains taxes may be significant.

Unlike Betterment and Wealthfront, Ellevest does not apply a broad tax-loss harvesting “brush” to all client portfolios.

The team doesn’t believe this is necessarily the best way to optimize for after-tax returns. For more information on the tax strategies employed by its rivals, you can view this tax article.

However, Ellevest doesn’t ignore tax considerations. Quite the contrary, it employs what it calls a Tax Minimization Methodology, which we describe below.

ELLEVEST PREMIUM

A primary difference between Ellevest Digital and Ellevest Premium is human oversight. Ellevest personnel monitor client accounts and make portfolio adjustments as necessary.

Think of Ellevest Premium as a more tailored solution to your individual needs, risk profile and financial objectives.

Ellevest builds a globally diversified portfolio that may include:

  • Individual debt instruments
  • Mutual funds
  • ETFs
  • Individual equities
  • Closed-end funds
  • Partnerships
  • Private and illiquid investments

Ellevest will look to apply tax minimization methods, including deferring capital gains and realizing losses when tax benefits outweigh transaction costs.

While investment methods are similar, perhaps the greatest benefit of Ellevest Premium extends beyond your portfolio to factor in your money growth strategies for life.

We were impressed that Ellevest doesn’t just “talk the talk” when it comes to building a financial solution for clients. Because of its insights into how income and spending patterns differ for men and women, Ellevest can help clients to better navigate career hurdles by providing Executive Coaches at no extra charge.

And because clients get 1:1 access to Chartered Financial Professionals, Ellevest has a more holistic overview of your overall financial situation, which means a more personalized and tailored experience.

Ellevest Tools

Ellevest’s stand out tool is its trade-off algorithm which spotlights the cost-benefit analysis when you allocate more to one investment than another.

Ellevest has a nice trade-off tool which gives you insights into the effects of prioritizing one goal over another.

For example, if you are saving up for a new car but set a new goal to go on a fancy vacation abroad, Ellevest will inform you what the impact is to your car-buying goal.

You can view your goals on Mint also if you wish. Simply eSign on the Ellevest dashboard and away you go!

Ellevest Pros and Cons

Ellevest charges competitive fees for both its Digital and Premium services, provides Chartered Financial Professionals and Executive Coaches at no charge to Premium clients, and even has a private wealth management service for higher net worth individuals. 

Ellevest ProsEllevest Cons
Management Fees: Ellevest Digital costs 0.25% annually while Ellevest Premium costs 0.50% annually. Both of these charges are in line with industry norms. Qualified Private Wealth clients, who want non-standard service options pay 0.90% annually.Tax Loss Harvesting: Ellevest views the merits of tax-loss harvsting differently to Betterment and Wealthfront.  While Ellevest does support tax-advantaged investing, it does not provide the granular approach to tax-loss harvesting, called Direct Indexing, offered by Wealthfront.
Emergency Fund Management Fee: No management fees are charged on monies held in emergency funds. This is highly unusual in the money management industry, which generally charges management fees even on cash held.Fewer Account Options: As a comparatively new robo-advisor on the scene, Ellevest caters to fewer account types than some other leading robo-advisors.
Chartered Financial Professionals: Ellevest Premium clients receive free 1:1 access to CFPs for personalized guidance on finances and money growth strategies.
Executive Coaches: Ellevest Premium clients also receive free 1:1 access to executive coaches in order to help navigate salary negotiations and career events.
Private Wealth Management: For qualified clients investing $1,000,000 or more, Ellevest provides a private wealth management service that includes value-based investing options.
Financial Goal Setting: Ellevest provides greater specificity and clarity on financial goal-setting than you might find elsewhere.

Instead of investing more generally for the long-term, you get to “bucket” your financial goals so you can specify for example that you are saving for a new home, buying a new car, saving up for a vacation, building an emergency funds cash cushion, preparing for college tuitions, or putting money aside for a wedding.

Trade-off Tool: If you’re on track to meet your financial goals, but must pay for something new, what is the effect on when you will reach your financial goals? Those are the insights you may glean from Ellevest’s trade-off tool.
Gender Focus: Data shows that women’s salaries peak earlier than they do for men. This important income difference has significant effects on investing allocations, which Ellevest recognizes and supports.

Ellevest Fees & Minimums

Unlike most traditional advisor who charge management fees on both invested assets and cash, Ellevest stands out by charging no management fees on money held in emergency funds. Overall fees compare well to other robo-advisors.

CategoryFees
Account Management Fees0.25% for Ellevest Digital
0.50% for Ellevest Premium
0.90% for Private Wealth Management
0.0% on emergency funds
Investment Expense Ratio0.06% → 0.16%
Account Minimum$0 for Ellevest Digital
$50,000 for Ellevest Premium
$1M+ for Private Wealth Management
Annual, Transfer, Closing Fees$100 IRA Transfer Out Fee
Personal Finance ToolsTrade-off Goal Setting

Ellevest Accounts

As the new kid on the block, compared to the the likes of Betterment, Wealthfront and Personal Capital, who started almost a decade earlier, Ellevest is playing catch up with the selection of accounts it has on offer.

TypeCapability
Taxable Brokerage AccountYES
Traditional IRAYES
Roth IRAYES
401(k)YES
403(b)YES

Ellevest Tax Strategy

Some basic tax minimization strategies are included as part of Ellevest’s offering, from deferring capital gains taxes and comparing transaction costs to realizing losses for tax purposes, but Ellevest differs from Betterment and Wealthfront when it comes to providing a “one-size fits all” tax-loss harvesting solution.

The Tax Minimization Methodology employed by Ellevest places tax-inefficient assets in tax-efficient accounts and tax-efficient assets in tax-inefficient accounts.

For example, tax-efficient municipal bonds are placed in taxable accounts while corporate and government bonds are placed in retirement accounts.

Plus, when your accounts need to be rebalanced, Ellevest maximizes your tax losses and minimizes your taxable gains wherever possible.

For specific tax advice, Ellevest encourages clients to consult with tax specialists.

TypeCapability
Tax Deferring GainsYES
Tax Loss Benefits Vs Transaction Costs ComparisonYES
Tax Minimization MethodologyYES
Automated Tax Loss HarvestingNO

Ellevest Summary

Top robo-advisors need to look over their shoulder because the new “kid” in town has a lot to offer. Ellevest may be younger than its leading rivals, Betterment and Wealthfront, but what it lacks in age it makes up for in a world class product offering.

Ellevest charges similar fees to Betterment for its purely digital solution, Ellevest Digital, and equivalent fees for its higher tier service, Ellevest Premium. Where Ellevest has the edge is its lower account minimum and it goes the extra mile by providing Chartered Financial Professionals and Executive Coaches who help with salary negotiations and career guidance.

Another standout feature at Ellevest is its gender focus. By recognizing that men and women experience salary peaks at different points in their respective careers, Ellevest constructs portfolios that are tailored to client needs. Plus, portfolio allocations dynamically adapt as clients get older to account for modified capacities for risk.

Ellevest considers tax impact in its service offerings and automatically rebalances portfolios as you might expect of any leading robo-advisor.

The bottom line is whether you are a woman or a man, you will need to go a long way before finding a robo-advisor that beats Ellevest.

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