Why Women-Focused Robos Haven’t Thrived... Yet
Appealing to a niche market — more specifically, to female investors — hasn’t been enough for several robo-advisors to survive, WealthManagement.com writes.
The latest such robo to close was WorthFM, announced in 2015 and launched the following year by Amanda Steinberg, founder of the personal finance newsletter DailyWorth, and Michelle Smith, the CEO of Source Financial Advisors, a wealth management firm catering to high net worth women, the web publication writes.
In December the company announced it was closing, according to WealthManagement.com. SheCapital, launched in 2015 by financial advisor Tina Powell, has also closed, according to the web publication. Ellevest, founded by former Merrill Lynch Wealth Management CEO Sallie Krawcheck, is the only big-name female-oriented robo that’s still standing, WealthManagement.com writes.
Neither Steinberg or Krawcheck responded to the web publication’s requests for comment. But Powell tells WealthManagement.com SheCapital didn’t survive because it didn’t grow fast enough.
“We started with a minimum viable product and while the clients we had seemed happy, our marketing efforts were not persuasive enough to support the growth we needed,” she tells the web publication.
Client acquisition challenges may have also been behind the closure of WorthFM, according to the publication. Its last SEC Form ADV, filed in September 2017, shows the firm had 600 clients, 1,800 discretionary accounts and $2.7 million in assets, WealthManagement.com. Appealing to women wasn’t enough, according to one male analyst.
“Unlike a car or other consumer good that has a brand that is more palpable, I’m not sure that a robo has that much differentiation by gender,” William Trout, a senior analyst at Celent, tells the web publication. “I’m not down on female-only investing. I just don’t think I see it as a great or overly compelling differentiator on its own.”