liz writes stuff down

Liz rides the subway on May 12, 2016: women’s financial planning

Liz rides the subway is a series containing thoughts I have on the subway, mostly as an experiment to get me to write more. Today's ride home from choir practice:

Former Citigroup CFO Sallie Krawcheck launched Ellevest yesterday. Ellevest differs from other investment platforms because it focuses on women's investment needs:

Women, for example, need a platform that takes into account not only her earnings, but also her salary arc - which is different from men's. It needs to account for the fact that women live longer than men, on average, when planning for retirement. It needs to understand the salary differentials between a womans pay and her male counterpart's pay and how that impacts her strategies.

Matt Levine counters:

People overrate the importance of an adviser who understands an investor's unique needs, because what all investors need is as much money as possible without losing any. (The financial solution to the loss of income from taking time off to raise children is to have more money, but that is the financial solution to every problem.)

Levine's response tricks you by letting you take “without losing any [money]” completely for granted, but investments aren't risk free. Ultimately, the risk you're willing to take on is influenced by how much money you have to invest - which is largely influenced by your earnings and career arc - and how much you cannot afford to lose - which is closely tied to how many more years you need to be able to support yourself. Seems to me that Krawcheck has a point, whether or not Ellevest is the solution.

Now, charging 50 basis points per year when your competitors charge half that is criticism I readily agree with.