The Pink Tax Of Robo-Advisors

With a high .5% management fee, is Sallie Krawcheck’s Ellevest — the app ‘redefining investing for women’ — charging a ‘pink tax’ for its platform?

There seems to be a plethora of robo-advisors and digital investment apps on the market attracting all types of people from first-time investors to women to the vastly untapped community of undervalued investors. The behemoths of the robo world like Betterment and Wealthfront have nicely situated themselves into the market by advertising a reasonable .25% management fee.

Nevertheless, robos have come under scrutiny regarding their fee structure compared to traditional brokerage firms. Most recently, Ellevest has been raising eyebrows with its high .5% management fee with no minimum balance required, which is double the price of other robo competitors. Some critics cite Ellevest’s .5% fee as another form of the ‘pink tax’ — the extra amount women are charged for certain products and services.

The high .5% premium definitely seems to be teetering the pink tax line.

So, while Ellevest hopes its premium fee will ultimately benefit the investor, it appears the fee and the firm’s outlook to help women financially prosper are only opposing one another rather than supporting.

While Ellevest claims to apply the management fee to build a quality platform, others in the space have built just as innovative platforms for half the price. Most competitors including Betterment, Wealthfront and Stash charge a .25% management fee after a certain portfolio balance.

If Ellevest is designed to help women grow wealth to achieve their goals, the .5% management fee would absolutely cut into monetary savings for female investors. And while the platform has good intentions, it would be more beneficial for Ellevest to slash the high management fee, which would allow women to use that money towards investing or saving.