Is Ellevest a Legitimate Brokerage Firm?
Money is Power-a commonly used phrase taken on by the women-led investing platform,
Ellevest. The robo-advisor and financial-literacy tool launched in 2014 making a statement about
investing for women by women.
Syvia Kwan, the Chief Investment Officer, stated “Women want
money as much as men do, but have different goals and intentions (and priorities and
preferences) when it comes to investing and spending”. From there, that’s exactly what they set
out for in creating Ellevest; to create an investment platform catered to the different money goals
sought out by women, but often hard to find.
The platform even goes so far as to consider factors
that may only impact women such as pay gaps, career breaks, and longer lifespans when creating
personalized investment portfolios. They also include a unique feature that allows members to
select companies for their portfolio that address environmental, social, and governance issues by
selecting their impact investment portfolio option.
Is Ellevest Legitimate?
In the United States, brokerage firms are tightly regulated by multiple overseers, not least of which is FINRA. This group is tasked with creating rules that securities firms must follow. FINRA also enforces them with fines and sanctions.
Ellevest helps to fund the organization with member dues, registration fees, and other contributions. Because FINRA closely monitors Ellevest to ensure compliance with ethical standards, it would be difficult for the brokerage house to pull off a major fraud.
FINRA maintains a profile of Ellevest.
Ellevest is also a member of the SEC, the U.S. government’s securities watchdog. The broker’s
SEC registration number is 021-241148. With strict enforcement of laws and rules from both
FINRA and the SEC, Ellevest customers have a lot of protections in place.
Is Ellevest SIPC Insured?
Ellevest participates in the SIPC insurance system, which protects American brokerage accounts up to $500,000. Technically, the insurance is valid per customer, not per account. That could be important in some situations. Half of the insurance limit can be used for cash balances.
It’s important to point out that SIPC only protects the number of shares in an account (up to $500,000 based on market price). It does not guarantee the market price. So if an investment in your brokerage account falls to $0 in price, there’s nothing SIPC would do in that unfortunate (but possible) situation.
Opening Ellevest Account
People of all genders are able to open accounts with Ellevest, and despite their gender
marketing they offer some of the most unique features on the market today.
Geared more towards
those with a conservative risk tolerance, they pose a better option than some of their competitors
such as Betterment and Wealthfront for like-minded investors. The reason behind this being that
women tend to place higher value in reaching a specific set goal over more speculative
investments that take greater risks.
Upon opening the account, just like many other robo-investing platforms, you’ll be presented
with a series of questions about your financial goals, education level, and other personal
information to judge your risk tolerance.
Ellevest Investment Options
You’ll then be automatically presented with a
personalized portfolio to accommodate your specified wants and needs as an investor. They have
a distinguishable focus on diversifying your portfolio by offering about twenty-one different
ETFs (exchange-traded funds) and mutual funds. Many of these are crafted from fund managers
such as Vanguard and other well-known, reputable, and long-lasting companies.
Taking diversification to the maximum comes with its drawbacks though, including the amount of fees
that you may be paying for each of these individual ETFs or mutual funds. However, they justify
this by stating, “... reality is we can’t predict how financial markets will behave, and we don’t
know anyone who consistently can. That is why we diversify - to offer protection against the
unpredictable”. Having multiple asset classes offers better protection against inflation and backs
their initiative for stable investing in order to reach your goals.
Ellevest Pricing
They do all of this while trying to implement extremely low fees, making it so users do as well as
the market while paying the bare minimum. They offer three tiers of memberships ranging from
$1 to $9 a month.
The Essentials plan starts at $1 a month and with this
plan members get a personalized portfolio, access to online workshops, banking services, and
20% off their coaching sessions.
Ellevest Plus will cost members $5 a month and
includes everything that the essentials plan does except users on this plan will receive 30% off
coaching sessions and have access to opening an IRA and retirement plan through Ellevest.
The last and most expensive plan offered is the Executive, coming in at nine dollars a month. With
this, members will receive all of the benefits from the plus plan except they will receive 50% off
of coaching services and in addition they will have access to multi-goal investing.
The multi-goal investing services offer members to open up five customized investment accounts for
different money goals such as a home, children, and other life events.
Ellevest Top Competitors
The major difference in Ellevest from other robo-advisors such as Wealthfront, which is oriented
on the amount of money you have in the account, is that they have no minimum deposit to start
investing, giving it a much lower barrier to entry than its competitors.
In deciding what
investment advising platform to use, investors should take into account what they pay in fees in
comparison to the amount that they will be investing. That break-even point for Ellevest is going
to be about $5,000 for the Essential plan, $24,000 for the Plus
plan, and $40,000 for the Executive plan.
Users planning on investing less than
these amounts would actually be paying more in fees than they would with other advisors like
Betterment or Wealthfront. Therefore, the more money users have invested in their account
above that break-even point they’ll actually be saving more in fees than they would with its
competitors.
Ellevest Banking Services
Outside of just investment portfolios, the company also offers banking services and private
wealth management.
The company offers what they call a Spend account which is just their
version of a checking account available with all membership options. The card has no minimum
balance, no overdraft or transfer fees, and unlimited ATM reimbursements.
The downside to this
card is that there is no APY (annual percentage yield) return, so you won’t be earning any
interest from the money on this card.
It isn't uncommon for platforms like this to also offer
banking services, yet many of its competitors will include an APY return on checking accounts.
With the debit card, they also have 5% cash back offerings for many local retailers.
Ellevest Private Wealth Management
The private wealth management service is available for those with $1 million or more
and forms a team to work with clients to get a clear view of their financial situation and goals to
put together an investment proposal. From here they monitor the account and make changes with
the market and will have regular check-ins with the client to review investments and financial
goals.
The fees for account management are 0.90% for clients with under $2
million in assets and that fee goes down with the more assets you have under
management.
They also have no upfront onboarding fees.
The client’s assets are managed and
held at Ellevest’s custodian, Charles Schwab and there is an alternative custody fee of
$250. They offer many different impact investment portfolios that allow
for stock-level tax-loss harvesting.
Investor Educationt
Unique to Ellevest, they also offer many different financial-literacy tools. They put out daily
articles on everything money from what’s going on in the economy to learning new financial
skills. They provide a wide array of workshops, planning worksheet, and email courses on
paying debt, setting money goals, retirement, budgeting, and career advancement. Depending on
the selected course some of these are free to members, but some will run around an additional ten
dollars.
One-on-one coaching is also offered with discounts in conjunction with specific
memberships and typically will run anywhere from one to two-hundred dollars.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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