In August, Tina Powell launched an online investing platform geared specifically toward women: SheCapital. According to SheCapital’s website, women are still earning just 79% of what their male counterparts earn, despite the rising number of women holding advanced degrees in the workforce. Furthermore, they tend to live longer than men, which places them at a higher risk of outliving their assets. The goal of this robo-advisor is to close the gender gap in financial advice, and empower women to achieve financial independence; a similar platform, ElleVest, is set to debut in early 2016. However, is this growing trend of gender-specific investment platforms the right approach for women to gain more ground in the industry?
One reason robo-advisors are becoming increasingly popular is the fact that they are a discounted alternative to hiring a traditional financial advisor. With the lower fees, however, comes more of a one-size-fits-all version of investment advice. In creating a portfolio for clients, robo-advisors typically focus on age, income, current savings, retirement age and risk level. Although SheCapital provides unique educational offerings that address factors specifically for women in the form of blog posts and social media updates, as well as instructional boot camps and events, gender still remains a trivial factor of an online investment portfolio. Because of this, there is no pressing need for women to have portfolios that are separate from men.
In addition to providing gender-specific investment advice, SheCapital describes itself as a less arduous, easier-to-use platform that “[takes] the complexity and anxiety out of investing for women.” While using this type of language can make some women feel more empowered to make their own investment decisions, it can also have the opposite effect. It can make women feel inferior by setting them to a lower standard of financial literacy, suggesting that they are incapable of understanding the investment platforms that their male counterparts use.
Furthermore, SheCapital is also is much more expensive than most other automated investment platforms – specifically, Wealthfront. The minimum investment amount for SheCapital users is a lofty $5,000, with an annual fee rate starting at 0.50%. Comparatively, users can invest in Wealthfront for a minimum of $500, with an annual fee rate starting at 0.25% on amounts over $10,000. Unless it can guarantee more long-term gains than its less expensive competitors, SheCapital’s higher price could hurt the investor’s returns over time, and impede its ability to attract new investors.
Although the goal of this robo-advisor is to empower women to take control of their financial lives, it still may not solve the issues for getting more women involved in investing. Despite its unique educational offerings, its higher price and marketing tactics will make it harder to compete with the industry’s leading automated investment platforms.