Author Topic: sallie krawcheck just e-mailed me  (Read 12945 times)

tiffany24

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sallie krawcheck just e-mailed me
« on: April 26, 2016, 01:09:36 PM »
Hi all,

A while back I signed up for Ellevest as a beta user after I heard about it on a podcast. I ended up investing with Betterment instead because of the higher fees associated with Ellevest. I felt they were essentially charging a "pink tax" and taking advantage of women and the "gender investing gap". Anyway... Sallie Krawcheck (or more likely her assistant on behalf of Sallie) e-mailed me asking for feedback and why I haven't invested. They have been offering to send their Beta users who have invested bouquets of roses as a thanks. Any ideas on how I can make this response a good one? Have any of you looked into Ellevest?

How much does Ellevest charge?
We charge an annual fee of 0.50% of your account’s average daily balance. (For example, an account with an average daily balance of $50,000 during the year would be charged $50,000 x 0.0050 = $250.) We have no minimum account balance.

Are there any other costs associated with my Ellevest account?
The total cost of your Ellevest account has three components: the Ellevest fee of 0.5% of your account balances, a fee that our custodian  FOLIOfn charges -- and then passes along to fund its government sanctioned regulator, FINRA -- when you sell securities,  and the underlying management fees associated with the ETFs in your account. The FINRA fee, which will appear as a Self Regulated Organization (aka SRO) fee on your bill, is $0.0000184 for each dollar of sale proceeds, which would be $0.17 on a $10,000 sale.  The ETF  management fees vary from 0.08% to 0.21% of of your account balance, depending upon the specific portfolio we recommend for you. (In contrast, average mutual funds charge fees of 1.00% or more on account balances.) Because the prices of the ETFs already include these fees, there is not a separate charge for these costs. All other trading, custody, and administrative costs associated with your Ellevest account are included in the 0.5% Ellevest fee.


Interest Compound

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Re: sallie krawcheck just e-mailed me
« Reply #1 on: April 26, 2016, 01:38:32 PM »
"Your fees of 0.58% - 0.71%, (including the 0.08%-0.21% for the ETF fee) are way too high. The fact that you have money to buy everyone flowers is evidence of this. Vanguard operates at-cost, so they would never do this, as the only way they could afford it is by raising fees, which wouldn't be in my best interests. Why make me buy flowers for myself?:



My current fees are 0.16% all-in. This reduction in fees will save me hundreds of thousands of dollars. Surely, someone concerned with the gender investing gap would see this as a good thing?"

Unfortunately, you went with Betterment's automated account instead of Vanguard's automated account, so you might have to adjust this a bit. BTW, Betterment is currently charging you between 0.31% and 0.51%, so it's really not that big of a difference.
« Last Edit: April 26, 2016, 02:07:03 PM by Interest Compound »

Kaspian

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Re: sallie krawcheck just e-mailed me
« Reply #2 on: April 26, 2016, 02:24:24 PM »
I'd rather get a $30 cheque from my investments rather than a bouquet of roses.  That's a big enough reason right there.

tiffany24

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Re: sallie krawcheck just e-mailed me
« Reply #3 on: April 26, 2016, 03:17:31 PM »

Unfortunately, you went with Betterment's automated account instead of Vanguard's automated account, so you might have to adjust this a bit. BTW, Betterment is currently charging you between 0.31% and 0.51%, so it's really not that big of a difference.

I love the idea of going straight to Vanguard but as a brand new investor- I just don't feel comfortable manually re-balancing yet. I like the idea of having technology do the work for me so I looked at a few different robo-investing services. I received 6 months free and found Betterment's .25 management fee to be a price I was willing to pay (for now). I would, however, like to later move toward Vanguard when i'm more confident. Not sure how smooth that switch over will be but I've received a lot of great advice saying it is the way to go.

Interest Compound

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Re: sallie krawcheck just e-mailed me
« Reply #4 on: April 26, 2016, 03:58:52 PM »

Unfortunately, you went with Betterment's automated account instead of Vanguard's automated account, so you might have to adjust this a bit. BTW, Betterment is currently charging you between 0.31% and 0.51%, so it's really not that big of a difference.

I love the idea of going straight to Vanguard but as a brand new investor- I just don't feel comfortable manually re-balancing yet. I like the idea of having technology do the work for me so I looked at a few different robo-investing services. I received 6 months free and found Betterment's .25 management fee to be a price I was willing to pay (for now). I would, however, like to later move toward Vanguard when i'm more confident. Not sure how smooth that switch over will be but I've received a lot of great advice saying it is the way to go.

This is a common misconception. Vanguard's automatic accounts are every-bit as automatic as Betterment. I would say I wish Vanguard advertised this more...but then all our fees would go up to pay for it :)

Here's a quick rundown of Vanguard's automatic accounts, you have two amazing options:

1. "I want Vanguard's experts to do everything for me. I'll just tell them my age and they'll put it in the appropriate Target Retirement Fund"



2. "I want Vanguard's experts to do everything for me. I'll just tell them how much risk I want, and they'll put it in the appropriate LifeStrategy Fund"



Then forget about it.

Choosing a Vanguard automatic account is effectively like saying, "Hey Vanguard. Will you manage that 3-fund portfolio for me that I keep hearing so much about?" These accounts:
  • Don't require advanced knowledge of the market to invest (anybody can do it with a few button pushes)
  • Are professionally managed automatically, by the only company which generates just enough profit to cover its costs, and with no outside owners (they are owned by people like you who invest with them) truly operates with your best interests in mind.
  • Relieve you of the burden of choosing your own asset allocation, and does so with no tracking error. Reducing behavioral mistakes and possible emotional abandonment to the strategy, the biggest risk to your portfolio.
  • Automatically rebalance.
  • Gradually get less risky as you age (TargetRetirement).
  • Keep you from tinkering with your portfolio.
  • Let you easily schedule automatic contributions while keeping your allocation balanced ($500 a paycheck automatically invested for example).
  • Let you easily schedule automatic distributions while keeping your allocation balanced ($4000 a month automatically deposited to your bank account for example).
  • Let you "Set it and forget it". You can literally login once, schedule automatic contributions, and come back 30 years later knowing everything has been taken care of for you.
  • Reinvest dividends automatically.
  • Don't try to beat the market by adding 10% of this and 5% of that. The aim is not to separate winners from losers, but rather to hold the entire market.
  • Give you the most diverse portfolio possible, with 21,600+ individual holdings across the world.
  • Allow you to easily invest money separately based on goals. Short-term money vs long-term money vs retirement money, for example.
The 3 fund portfolio is the manual version of Vanguard's automatic accounts. Either way your investments are the same, you just have more control. Both are great choices, but if you aren't ready for the 3 fund portfolio (0.08% fee), going with one of Vanguard's automatic accounts (0.16% fee) is just as good. I've checked this a few times recently, and it's not uncommon to see their automatic rebalancing more than make-up for the 0.08% fee difference when compared with the 3 fund portfolio.

:)
« Last Edit: April 26, 2016, 04:04:52 PM by Interest Compound »

wienerdog

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Re: sallie krawcheck just e-mailed me
« Reply #5 on: April 26, 2016, 04:08:25 PM »
If you pick a target retirement fund you don't have to rebalance.  Pick one that is far out as 2040 (VFORX) or greater and you will end up with a 90% / 10% split just like the aggressive at Betterment.  It is only 0.16% fees.  If aggressive isn't for you pick one a little closer to the current year.

https://investor.vanguard.com/mutual-funds/target-retirement/#/

I did the same thing at first I had a TD Ameritrade account and started a Betterment account after reading about robo advisers before I really knew about Vanguard.  Some of the ETF I was in at TD were Vanguard since they traded for free.  Once I saw Betterment used mostly Vanguard funds I decided I might as well open a Vanguard account.  Long story short I ended up moving everything to Vanguard.  Not much of a problem but could have saved a little hassle just starting there in there first place.  Now I have a rollover IRA, Roth and taxable account at Vanguard.

Interest Compound

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Re: sallie krawcheck just e-mailed me
« Reply #6 on: April 26, 2016, 04:42:45 PM »
If you pick a target retirement fund you don't have to rebalance.  Pick one that is far out as 2040 (VFORX) or greater and you will end up with a 90% / 10% split just like the aggressive at Betterment.  It is only 0.16% fees.  If aggressive isn't for you pick one a little closer to the current year.

https://investor.vanguard.com/mutual-funds/target-retirement/#/

I did the same thing at first I had a TD Ameritrade account and started a Betterment account after reading about robo advisers before I really knew about Vanguard.  Some of the ETF I was in at TD were Vanguard since they traded for free.  Once I saw Betterment used mostly Vanguard funds I decided I might as well open a Vanguard account.  Long story short I ended up moving everything to Vanguard.  Not much of a problem but could have saved a little hassle just starting there in there first place.  Now I have a rollover IRA, Roth and taxable account at Vanguard.

Were there fees to move everything out of Betterment? Also- would you need to wait a certain amount of time from when you open the Betterment account to when you move the funds to Vanguard? Thanks for the info!

No fees, and no required waiting period. You can do it today! I have a few friends who went through the process, it's easier to call Vanguard and let them do the work for you. :)

tiffany24

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Re: sallie krawcheck just e-mailed me
« Reply #7 on: April 26, 2016, 04:44:43 PM »

The 3 fund portfolio is the manual version of Vanguard's automatic accounts. Either way your investments are the same, you just have more control. Both are great choices, but if you aren't ready for the 3 fund portfolio (0.08% fee), going with one of Vanguard's automatic accounts (0.16% fee) is just as good. I've checked this a few times recently, and it's not uncommon to see their automatic rebalancing more than make-up for the 0.08% fee difference when compared with the 3 fund portfolio.

:)

Thanks so much for taking the time to outline all of this! Looks like the Target Retirement 2055 fund would be right for me :)

wienerdog

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Re: sallie krawcheck just e-mailed me
« Reply #8 on: April 26, 2016, 05:08:14 PM »
Were there fees to move everything out of Betterment? Also- would you need to wait a certain amount of time from when you open the Betterment account to when you move the funds to Vanguard? Thanks for the info!

I don't recall any but mine were all in a taxable account and I was in for 6 months or so.  An IRA or Roth might have a fee but I am not sure.  I first looked at transferring and it was easy to setup at Vanguard.  I actually did it all online and needed some paperwork kinda like notarized (can't remember the term now but has to do with banks and my bank did it) but then I realized I would be stuck with some of Betterment's iShare funds that they use and a couple others.  At Vanguard I would get charged $7.00 to sell them.  I just cashed out my account back to my bank and then transferred it to Vanguard.  I was able to use some of the losses as the market went down over that time for tax loss harvesting.  In the long run I'll be better off (no pun intended) at Vanguard.  No sense in paying the Betterment fees.

If it is a retirement account you will have to go through the transfer process.  I also used it from TD Ameritrade as it was an IRA and it was painless but all I had there were Vanguard funds that trade for free.  Don't let a $7 fee on a few funds stop you.  You'll make that up not having the Betterment fees over time.

Vagabond76

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Re: sallie krawcheck just e-mailed me
« Reply #9 on: April 26, 2016, 09:08:46 PM »
A while back I signed up for Ellevest as a beta user after I heard about it on a podcast. I ended up investing with Betterment instead because of the higher fees associated with Ellevest. I felt they were essentially charging a "pink tax" and taking advantage of women and the "gender investing gap". Anyway... Sallie Krawcheck (or more likely her assistant on behalf of Sallie) e-mailed me asking for feedback and why I haven't invested. They have been offering to send their Beta users who have invested bouquets of roses as a thanks. Any ideas on how I can make this response a good one? Have any of you looked into Ellevest?

If that isn't a "pink tax" I don't know what is.

teen persuasion

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Re: sallie krawcheck just e-mailed me
« Reply #10 on: April 27, 2016, 06:56:38 AM »
A while back I signed up for Ellevest as a beta user after I heard about it on a podcast. I ended up investing with Betterment instead because of the higher fees associated with Ellevest. I felt they were essentially charging a "pink tax" and taking advantage of women and the "gender investing gap". Anyway... Sallie Krawcheck (or more likely her assistant on behalf of Sallie) e-mailed me asking for feedback and why I haven't invested. They have been offering to send their Beta users who have invested bouquets of roses as a thanks. Any ideas on how I can make this response a good one? Have any of you looked into Ellevest?

If that isn't a "pink tax" I don't know what is.

Agreed!

Although the part that had me scratching my head was the "gender investing gap".  My DH has absolutely zero interest in finances, that's my arena.  Whenever the topic of couples and finances comes up on another money forum I'm active on, it seems there's quite a tilt to the female side of the couple as the more active financial partner, the family CFO as we've termed it.  At the very least, I'd guess interest in investing was roughly evenly distributed between the genders, but my own experience  tilts the other way - more women doing investing.  JMHO.

stashgrower

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Re: sallie krawcheck just e-mailed me
« Reply #11 on: April 27, 2016, 08:59:26 PM »
"Although the part that had me scratching my head was the "gender investing gap"."

teen persuasion... Though worded as above, maybe it's not only about the inclination to invest, but also about the gender pay disparity and the unpaid time many women take away from the workforce. Many women end up with smaller nest eggs than their counterpart men. Unfortunately, they might also need more due to longer life expectancy.

Vagabond76

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Re: sallie krawcheck just e-mailed me
« Reply #12 on: April 27, 2016, 10:03:59 PM »
"Although the part that had me scratching my head was the "gender investing gap"."

teen persuasion... Though worded as above, maybe it's not only about the inclination to invest, but also about the gender pay disparity and the unpaid time many women take away from the workforce. Many women end up with smaller nest eggs than their counterpart men. Unfortunately, they might also need more due to longer life expectancy.

I read through that Ellevest website and concluded that everything on it is sales(wo)men horseshit. All of the articles say the myths are false but the underlying message is women really do need someone to hold their hands...just not the guy they have been using. My opinion is backed up by the offer of a bouquet of flowers. Fuck that. If someone wants flowers (1) grow them yourself, (2) buy them yourself, or (3) drop a hint to a SO. Keep investing and flowers separate.

Most of the post above regarding "gender investing gap" is HS too. Women may live longer but most of the difference is self-inflicted by dumb-ass male lifestyle choices. Men take time away from work too--women and men who take a couple years off rarely do so for reasons other than personal choice. We are all accountable for our choices (unless one lives in Bernie's world). The pay gap is not a valid argument for an investing gap either. If a woman earns nod therefore bases her lifestyle on, suppose, 70% of a man's pay, she only needs 70% of the retirement stache. I'm not saying the pay gap is right, it's just not a valid argument for a "gender investing gap."

teen persuasion

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Re: sallie krawcheck just e-mailed me
« Reply #13 on: April 28, 2016, 11:21:49 AM »
"Although the part that had me scratching my head was the "gender investing gap"."

teen persuasion... Though worded as above, maybe it's not only about the inclination to invest, but also about the gender pay disparity and the unpaid time many women take away from the workforce. Many women end up with smaller nest eggs than their counterpart men. Unfortunately, they might also need more due to longer life expectancy.

See, all of those things are my reasons for being interested in investing and finances.  SAHM for nearly 20 years, check.  Currently working only part time (in a female dominated field) for less than 1/2 DH's pay, check.  No access to own 401k, check.

Since I wasn't/am not earning as much as I'd like, I'm even more motivated to make the most of the income available to me, and make a shift to nonemployment income sources in the future.  AKA, become FIRE.

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Re: sallie krawcheck just e-mailed me
« Reply #14 on: April 28, 2016, 12:00:53 PM »

The 3 fund portfolio is the manual version of Vanguard's automatic accounts. Either way your investments are the same, you just have more control. Both are great choices, but if you aren't ready for the 3 fund portfolio (0.08% fee), going with one of Vanguard's automatic accounts (0.16% fee) is just as good. I've checked this a few times recently, and it's not uncommon to see their automatic rebalancing more than make-up for the 0.08% fee difference when compared with the 3 fund portfolio.

:)

Thanks so much for taking the time to outline all of this! Looks like the Target Retirement 2055 fund would be right for me :)

I seem to recall some research showing that even with no rebalancing, just 80/20 or 60/40 during accumulation the differences were quite small in the end. But don't remember where I saw this.

Just watch out for large tax hit when you transfer, if it's a taxable account. But with the recent market moves down this might not be an issue.

merula

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Re: sallie krawcheck just e-mailed me
« Reply #15 on: April 28, 2016, 12:24:12 PM »
I heard a female exec from Fidelity speak recently, and she attributed a lot of the gender investing gap to older women who never took control over their own finances, unless they had to due to divorce or widowhood. Times are changing, but something like that doesn't change overnight.

If a woman earns nod therefore bases her lifestyle on, suppose, 70% of a man's pay, she only needs 70% of the retirement stache. I'm not saying the pay gap is right, it's just not a valid argument for a "gender investing gap."

This whole website is based on the idea that your spending shouldn't be a function of your income, so this is misleading at best. If a man makes $100,000 and a woman makes $70,000 and they both live on $30,000, the man can retire in 8.5 years but the woman needs to work almost twice as long and retire after 15 years. (Based on http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)

Interest Compound

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Re: sallie krawcheck just e-mailed me
« Reply #16 on: April 28, 2016, 01:29:02 PM »

The 3 fund portfolio is the manual version of Vanguard's automatic accounts. Either way your investments are the same, you just have more control. Both are great choices, but if you aren't ready for the 3 fund portfolio (0.08% fee), going with one of Vanguard's automatic accounts (0.16% fee) is just as good. I've checked this a few times recently, and it's not uncommon to see their automatic rebalancing more than make-up for the 0.08% fee difference when compared with the 3 fund portfolio.

:)

Thanks so much for taking the time to outline all of this! Looks like the Target Retirement 2055 fund would be right for me :)

I seem to recall some research showing that even with no rebalancing, just 80/20 or 60/40 during accumulation the differences were quite small in the end. But don't remember where I saw this.

Just watch out for large tax hit when you transfer, if it's a taxable account. But with the recent market moves down this might not be an issue.

Can you elaborate on this? Sorry i'm a very new investor. Are you referring to the short term capital gains or are there other implications? My portfolio was only up about $200 from the amount it started out with so from my understanding, those 200 would be taking the hit, right?

Yes, you'll pay about $50 in short term capital gains taxes. Be thankful it's so low. Had you waited too long, the tax bill would be so high that you'd effectively be stuck with Betterment forever.