Your Money

Financial Advice for Women, From Women

NOV. 9, 2015

It’s been a long time since a talking teenage Barbie doll uttered the words, “Math class is tough!” That was 1992, and the uproar that ensued caused Mattel to banish the words from Barbie’s vocabulary.

Today, as men’s and women’s traditional roles continue to blur, companies are even more careful not to reinforce gender stereotypes.

Yet at the same time, two new online investment firms — known as robo-advisers — are introducing products that suggest women need extra hand-holding with their money. They are offering financial and investment advice tailored just for females.

Women are increasingly their households’ breadwinners, and they are more likely than men to enroll in and complete college. Women are also a growing market, exercising decision-making control of an estimated $11.2 trillion in investable assets, according to the Center for Talent Innovation.

But do they really need specialized help — any more than the sort of personalized attention that many consumers crave? Or are these firms, backed by big investors, simply grasping for women’s growing wallets?

Amanda Steinberg — founder of DailyWorth, which sends its 1.2 million female subscribers daily emails about money — will soon introduce a robo-adviser for women with Michelle Smith, whose firm Source Financial Advisors caters to multimillionaire women who have been divorced. Their new service, Worth Financial Management, will make its debut next year. But the gendered focus isn’t necessarily being driven by women’s need for extra help, Ms. Steinberg said, and is instead the response to a dialogue she has had with her subscribers for nearly seven years.

“I know they don’t like what is out there,” Ms. Steinberg, a programmer, said of her subscribers, who, on average, are 38 years old and earn $78,000. “My mission from the beginning was about empowering women to build net worth. Not to get better at budgeting, not to save $10 when buying flowers for their dinner party. It was to give them control over their futures.”

Women surely face their own set of challenges. They generally earn less than men, are more likely to take breaks from the work force, and live longer, all intractable issues that demand societal and policy changes, like less male-focused workplaces and policies.

Helping women account for these handicaps is what is driving Sallie Krawcheck, a former Wall Street executive, into the same business: She recently announced plans to introduce her own robo-adviser, Ellevest, next year.

“Men have more room for error,” said Ms. Krawcheck, who became well known on Wall Street after she graced the cover of Fortune in 2002 as one of Wall Street’s “last honest analysts.” She has held high-ranking positions at Bank of America and Citigroup, and along with her co-founder, Charlie Kroll, raised $10 million for her new venture from several heavy hitters (mostly men) in the financial industry.

She declined to provide details about the service, but here is hoping Ms. Krawcheck will veer far from her Wall Street roots and use her stature to provide the kind of low-cost, comprehensive advice that is still more difficult for nonwealthy people to come by.

The women at WorthFM, as the firm will be known, both divorced single mothers with an unstoppable entrepreneurial drive, have already mapped out their approach and raised $2 million from investors — all divorced women. They will focus on the mass affluent, generally someone with less than $500,000 to invest. That amount is usually not enough to capture the attention of many human advisers (who generally charge 1 percent of assets) because of sheer economics.

But an integral part of WorthFM’s approach is to act a tad more like a human adviser — that is, build a relationship first and then get into all the money stuff.

So how does one go about building a relationship with a robot? Apparently, by making a woman feel that she has been heard.

To do that, they need to learn how she relates to money. They will ask her to complete a “MoneyType” assessment, a 40-question survey the company developed with a psychologist. The results, they say, will reveal her perspective and behavioral relationship with money — one dominant type or some combination of the five types may emerge.

With that information in hand, the service will personalize the woman’s path through the site, taking into account her financial circumstances and knowledge about finance.

The women who value money as a means to pleasure might first be presented with a video featuring the co-founders, in an attempt to engage them. Those who see money as a means to stability and control might see a savings chart or more explicit directions on what to do next. The robot will also take note of how many times the client logs in.

The idea is to keep the user interested and to build her confidence. “Our job is to get to know her and reflect back to her what is important to her,” Ms. Steinberg said. “We are feeling out her level of intensity so we can be responsive to her instead of pushing her.”

Ms. Smith said it amounted to digitizing the type of experience you can have in a human adviser’s office. “Good advisers do this first,” Ms. Smith said. “They don’t come out with their proposal and say, ‘Pick a plan! Pick a plan!’ ”

The overriding goal, however, is the same for all users. Once an account is in place, the site will guide users to set up two separate pots: a short-term savings account, with the goal of contributing three months of net income (you can link to an outside account); and a longer-term account for retirement savings (like an individual retirement account or a taxable brokerage account). They will recommend one of five diversified portfolios of low-cost exchange-traded funds, though more account types and funds are expected to come later (including joint accounts that can be held with male partners or husbands).

Users will have the ability to automate their savings, but within six months, the service plans to introduce an algorithm to figure it out for them. Based on recurring patterns in the user’s income and expenses, it will automatically shuttle a safe amount into savings or investments, similar to what the Digit app does now, with the user’s permission.

“The focusing on where all of your money goes is a frustrating and impossible process for a lot of people,” Ms. Steinberg said. “So we are inverting it by thinking about your buckets. It’s not ‘Do I go out to dinner or do I not?’ It’s savings.”

Ms. Steinberg said her firm planned to measure its success with one yardstick: It aimed to increase each women’s net worth by 30 percent over five years.

Building one’s net worth is just as much about chipping away at debt as it is as building savings. And one of the biggest weaknesses of robo-advisers is that they fail to address a person’s entire financial picture as a human adviser might, instead focusing on the handful of investment accounts they offer. Ms. Steinberg said she wanted to address the whole picture, including debt management, but that would come later.

WorthFM will charge one all-inclusive fee — including underlying investments — that is generally competitive with those of other robo-advisers, which charge anywhere from 0.15 to 0.50 of total investable assets. (They declined to provide specifics because they hadn’t yet filed pricing data with regulators.)

According to a 2009 report by the Boston Consulting Group, there is a huge opportunity to capture women’s wallets — “one that can be immensely profitable for financial institutions,” the report said, noting that women continually feel exasperated by the poor way financial companies treat them.

Robo-advisers deliver the same product to everyone. But even some of the leading firms in this category, including Betterment and WealthFront, each with $3 billion under management, admit that their customers are largely male.

WorthFM and Ellevest aren’t the first to try to win women’s wallets. LearnVest, which sells comprehensive financial advice, started in 2009 as a budgeting website directed at women, but it eventually broadened out to include men, too. In March, it was acquired by Northwestern Mutual. With only about 10,000 customers paying for its standard financial plans at that time, its fate is now unclear.

“The economics of the industry are tough,” said Manisha Thakor, director of wealth strategies for women at Buckingham, an investment advisory firm.

Interestingly, women may actually be better savers and investors than men. “Women do it a little bit better,” said Jean Young, a senior research analyst at Vanguard, who recently completed a study that found that females tend to save more, on a percentage basis, in their 401(k) plans than their male counterparts.

“They are more likely to be in the plan, they save more when they are in the plan, they trade less and they take advantage of professional management,” she added.

Their problem? Even though they squirrel away more, the average man’s account balance is about 50 percent larger, largely because women earn less on average.

And that can’t be solved by any robo-adviser.

Correction: November 6, 2015

An earlier version of the picture caption with this column reversed the identities of the two women shown. Amanda Steinberg is on the left and Michelle Smith on the right.

A version of this article appears in print on November 7, 2015, on page B1 of the New York edition with the headline: Financial Advice for Women, From Women .

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