Ellevest

Magazine

Our Commitment to Racial Justice (Updated)

By Ellevest Team

Our mission is to get more money in the hands of women+. That mission is inclusive of Black and brown women, which means that everything we do as a company must be anti-racist as well as pro-women+. Last July, we originally published this article to hold ourselves accountable to our commitments as a company to fight systemic racism. We’re serious about these commitments, and about deepening them as we continue to push forward. We also promised regular updates about what (and how) we’re doing.

Here’s an update of what we did in the second half of 2020, and what we’ve got in the works for 2021.

Making Ellevest a more inclusive workplace

As an employer, we’re working toward racial justice, not diversity. That means hiring and managing across lines of difference, looking for patterns, over-representing underrepresented groups at all levels, and making organizational change wherever we need to. As we began examining the work ahead of us, we realized change needed to start with us, so workplace initiatives became our main focus for the second half of 2020 (though definitely not the only one).

Milestone: auditing our policies and prioritizing the work

We partnered with an equity and inclusion consultancy founded and run by a Black woman to inform, strategize, and prioritize the work we’re doing to build an anti-racist organization. Our consultant audited and examined our internal policies and programs, looking for biases and microaggressions, and we’ve done the work to incorporate each of their suggestions, including prioritizing the below milestones.

Milestone: more diversity on our leadership team

Companies can only truly be committed to antiracism work if their leadership team reflects that commitment. We currently have 11 people on the leadership team. Here’s what it looks like now.

As of January 11, 2021: 18% Black, 55% people of color overall, 9% Latinx, 27.27% Asian, 45.45% white, 82% women. That’s a double-digit increase in representation of Black people, of people of color overall, and of women on our leadership team since July 2020.

Milestone: improving our hiring practices

With our consultant, we’ve made some anti-bias updates to our hiring process. While our process was quite structured before, we’ve taken time to improve, document, and format it for any employee who interviews. Improvements include:

  • Requiring employees to review tools and resources for minding their biases, using inclusive language before interviews and holding regular training for new and existing interviewers.

  • Creating a grading rubric that can help fairly assess candidates’ answers and consistently compare applicants’ responses.

  • Documenting and evangelizing our process with expanded prep guides and formal interview kickoff meetings.

Milestone: inclusive style guide

Our consultant and Ellevest’s editor in chief worked together to create inclusive content guidelines we are now using for external and internal communication. These guidelines include guidance on intersectionality and on sharing names, titles, and pronouns. They were presented to the entire team, are part of new employee onboarding, and live in an easily accessible place.

Milestone: supporting employee-led initiatives

Our People Ops team helped individual employees to create a new employee resource group to amplify Black voices within the company. People Ops partnered with the ERG to host several events, including a panel discussion about their experiences of being Black in America and at Ellevest; hosting a Black Lives Matter film series and discussion groups; and supporting volunteer events over the year.

Milestone: anti-racism education

Working with our consultant, we’ve held mandatory anti-racism and unconscious bias training and discussions and created small group spaces to participate in guided discussions and talk about anti-racism work. We’ve curated and circulated a list of anti-racism resources for team members that includes books, film, TV shows, and podcasts, and we reimbursed our employees for their purchases of any materials related to anti-racism education.

Continuing:

We’ll keep holding ourselves accountable by publicly sharing the demographic information of our company — and teams. We’ll keep giving our colleagues flexibility to take the time they need — whether that’s self-care, family care, protests, and / or activism work.. We’ll also continue organizing and scheduling additional time to do anti-racism work with colleagues.

We’ll continue to share our employee team composition, including our goals for Black executive leadership. You can bookmark this article to see open positions and opportunities as they’re posted, and you can also check our Careers page.

In progress:

Update: New colleagues are only part of the goal; it’s also necessary to look at the processes and culture that exists now. We identified three key goals on that path:

  • First, pay equity. We’ll launch an ongoing analysis to find and fix any inequities based on gender, race, ethnicity, or sexual orientation. We’ll also make sure we’re transparent with with each employee about our compensation framework. Now that our auditing is complete and some milestones hit, we’re working with our consultant on the best approach to this framework in 2021.

  • Along with our mission of getting more money in the hands of women, everything we do at Ellevest stems from a set of core values. We’ll re-examine these values as a group to be sure they’re inclusive and don’t contain any cultural biases that reinforce white supremacy. This is one of our priorities for the first quarter of 2021.

  • Anti-bias, anti-racist, allyship, and inclusive leadership training aren’t magic wands you can wave to change a company culture, and we know that. But they are valuable. We’re committed to making them regular, meaningful, and uncomfortable when they need to be. The first wave of this work is now a milestone, and we are continuing with new and regular trainings in 2021.

New commitment: Working with our consultant, we’ve identified the need for more inclusivity specifically within the teams that work directly with our clients and members. We’ve made progress on that front within our coaching and customer interaction teams, and are working to do more, especially with the financial advisors on our Private Wealth Management team.

New commitment: We are working on public, continually updating reports on diversity across our entire company, including the composition of our leadership team, our engineering, product, client-facing, and marketing teams, and our employees overall.

Adding to the investment products we offer

This is a big one for us, because we’re in a position to help create change in ways that others can’t. Financial services is a huge system, which means that it’s subject to systemic racism. This is obvious when you begin to look for investment offerings with specific mandates for racial justice. (Very few exist.) As a company that offers both a digital membership and a Private Wealth Management service, we have a few different levers we can pull.

New milestone:

In July, we committed internally to have conversations with each of our fund managers about their commitment to diversity in their own management teams. We’ve since done that, and spoke with those fund managers where we didn’t see diversity to ask them to be more intentional about their hiring. In 2020, one of those managers introduced two new members of their senior team: a Black man and a white woman.

Previous milestones:

Last summer, we made changes both in our digital membership and in our Private Wealth investment offerings. In the Ellevest Impact portfolios for our digital members, we expanded our target investments with the Access Community Capital mutual fund. Ellevest investors’ funds are now directed into both women-owned businesses and businesses owned by BIPOC people (aka Black people, Indigenous people, and other people of color). We also target pools of mortgages owned by low-income heads of households who are women and BIPOC people, when such information is shared and available, and we’re actively seeking investments in communities with predominantly residents of color. As of September 30, 2020, the community demographics of these investments across both businesses and mortgage pools were 37% Latinx, 18% Black, 18% multi BIPOC (meaning primarily BIPOC but with a mixed demographic), 18% White, 5% Asian, and 4% unknown. Two of the affordable housing investments are in neighborhoods with 95% or greater BIPOC population.

At the same time, we launched something new for our Private Wealth clients: an expansion of our Ellevest Intentional Impact portfolios.1 We created them in the fall of 2019 to allow investors to shift their equity investments (aka stocks) away from companies with policies, practices, and products that may harm women and into companies that meet our criteria for doing better.

Last spring, we widened our lens for these portfolios past gender-specific data to practices that have been shown to harm or exclude Black and brown people — and therefore Black and brown women. This includes private prisons and companies that profit from the prison industry through predatory practices.2 You can read more about the Ellevest Intentional Impact portfolios here.

In progress:

While our Private Wealth clients’ portfolios can contain hundreds of individual stocks, we can’t do that with our online investing platform, which we offer to Ellevest digital members. Our online investing portfolios are made up of exchange-traded funds (ETFs) and mutual funds, which are baskets of pieces of ownership in many investments all at once. We use these because they allow us to create highly diversified portfolios at a low cost, no matter how much you have to invest.3 This is our duty to all of our members as a fiduciary.

For Ellevest members, we’ve been doing the work of evaluating and researching our next step. As Chief Investment Officer Sylvia Kwan wrote earlier this year, we don’t actually create the ETFs we recommend — fund companies do. We’re not able to delete any of the little pieces from those funds, and fund options that match the lens of our Intentional Impact portfolios are nearly nonexistent right now.

So what does that mean? As of January 2021, four of our ETFs currently have minimal holdings in private prisons, which may show up in your portfolio. We’re actively looking for ways we might change that. We have done substantial research and have made progress identifying suitable replacements for those funds. We will update you again when this work is complete.

Update: Another goal in progress for our Private Wealth clients is an alternative investment to direct capital to private businesses owned or led by women and people of color, including Black business owners. As with stocks, we can offer alternatives directly to our Private Wealth clients while still keeping their portfolios diversified. Since last summer, we have also had conversations with all of our fund managers with relevant products about how they can integrate racial justice into their investment process. We’re working on the launch of a social equality fund in 2021 (stay tuned!), and we’re in conversations with other fund managers to keep the work going.

We’re aware that being able to offer more options to invest for racial justice to our wealthier clients is a troublesome reflection of the systemic nature of the business overall — but we also believe that shifting more capital directly into the hands of Black-owned businesses and supporting leaders of color will help grow those businesses, create jobs, and create systemic change.

Creating a more inclusive product and message

This one’s also crucial: What works for some women as they learn about money and career won’t work for all. We have more work to do so that our product is truly serving Black, Latinx, Indigenous, and Asian women (not just the “average” woman, who doesn’t exist). Outside of our product, we’re committed to using our social platforms responsibly to be inclusive of our entire community.

Milestone: Android app launch

We’re a research-based team, and in 2020, we committed to research to improve our product experience so it is more directed toward getting more money in the hands of Black, Latinx, and Indigenous women+ specifically. According to the Joint Center for Political and Economic studies, a non-profit think tank that focuses on how public policy affects Black communities, 66% of Black people and 62% of Latinx people use Android phones. We had an Android app on our roadmap, but given this data, we chose to prioritize working on it in 2020. You can now download the app on Google Play.

Continuing:

We’ll continue to amplify the voices and experiences of Black, Latinx, and Indigenous women and other women of color in our content. Just a few examples (you can look at our Instagram for many more, btw):

In progress:

We’ll also continue to have the goal of getting more money in the hands of Black, Latinx, and Indigenous (BIPOC) women+ within our product experience overall (and we always will), and will continue to incorporate this lens into all the research we do as a company.

Update: As we continue to examine ways that we as a company can support Black-owned businesses and Black creators — as well as other people of color — we’ve prioritized reviewing our relationships with our own vendors. In 2021, we’ll continue that review to set a goal for the number of businesses we work with owned by Black people and other people of color. We’ll also be looking at other ways we can create partnerships that prioritize their success.

We’ll keep learning, keep expanding, and keep deepening these commitments. We’ll keep reporting back on our progress toward them, even if we’ve stalled. As we do the work of exploring, prioritizing, and turning these commitments into reality — then reviewing how that reality is going — we’ll again add to or change this article with an explanation of our decisions.

And — as always — we want to hear from you. Email us anytime with your questions, feedback, or suggestions.

Ellevest Intentional Impact portfolios are separately managed equity accounts that are sub-advised by Ethic, Inc., an SEC-registered investment advisor. As sub-advisor, Ethic constructs and manages portfolios of individual stock positions benchmarked to an underlying index and customized to specific values criteria. The sub-advisor seeks to track the performance of a designated equity benchmark (domestic and / or international) while outperforming on impact across key sustainability criteria as defined by Ellevest and / or the client.

The minimum investment in Ellevest Intentional Impact Portfolio is $250,000. In addition to Ellevest’s advisory fee, the client will pay 0.30% of assets managed to the sub-advisor.

The Ellevest Intentional Impact portfolios uses the divestment recommendations created by the American Friends Service Committee to identify and screen out companies for practices around the private prison ecosystem. Those recommendations are based on an assessment of three criteria: the salience of the human rights violation, the company's responsibility for the violation, and the company's responsiveness to stakeholders’ concerns about the violation.

FYI, here's the fine print on how the portfolios work.

Account Requirements

Ellevest Digital doesn’t require you to maintain a minimum account balance. However, there are portfolio-specific minimums (ranging from $1 to approximately $240). You may not receive the entire recommended portfolio until your account balance meets the respective portfolio minimum.

Rebalancing and Ongoing Management Ellevest will not rebalance a portfolio until it meets the respective account balance minimum necessary to generate the required shares. This minimum is a function of portfolio allocation and the share price of individual holdings, which will vary.


Disclosures

© 2020 Ellevest, Inc. All Rights Reserved.

1Ellevest Intentional Impact portfolios are separately managed equity accounts that are sub-advised by Ethic, Inc., an SEC-registered investment advisor. As sub-advisor, Ethic constructs and manages portfolios of individual stock positions benchmarked to an underlying index and customized to specific values criteria. The sub-advisor seeks to track the performance of a designated equity benchmark (domestic and / or international) while outperforming on impact across key sustainability criteria as defined by Ellevest and / or the client.

A firm reporting that more than 5% of their revenues are from firearm sales will be screened out. Note that not all companies report their revenues from gun sales, so we can’t guarantee that you will be fully divested from firearms.

2The Ellevest Intentional Impact portfolios uses the divestment recommendations created by the American Friends Service Committee to identify and screen out companies for practices around the private prison ecosystem. Those recommendations are based on an assessment of three criteria: the salience of the human rights violation, the company's responsibility for the violation, and the company's responsiveness to stakeholders’ concerns about the violation.

3The tracking error of Ellevest Intentional Impact Portfolios before the update, as of 7/8/20: 1.36%. Tracking error of the enhanced strategy: 1.37%. The tracking error relates how well a portfolio's performance aligns to the underlying benchmark performance.

Ellevest Intentional Impact portfolios are expected to comprise around 300 US-listed equities (including ADRs as applicable) chosen through an outsourced multi-factor optimization software and sustainability data science developed by Ethic to minimize tracking error.

The sustainability criteria is based on risks in the following categories: Ethics and Fraud, Firearms, Excessive Remuneration, Exploitative Products, Greenhouse Gas Emissions, Human Rights and Community (including private prisons), Labor Relations, Product Quality and Safety, War, Waste, Water, Working Conditions, and Workplace Diversity (including gender metrics on low employee representation, low management representation, and low board representation).

The primary benefit of Ellevest Intentional Impact portfolio is that it provides broad market exposure with a goal of keeping average tracking error low over the long term, less than 1.50%, while divesting from companies that do not meet the strategy’s sustainability parameters. The tracking error may be meaningfully higher if the equity allocation is transitioned over time due to tax or other considerations.

Some of the key risks for investing in an Ellevest Intentional Impact portfolio include:

Market Risk
As with all publicly traded securities, the SMA is exposed to market risk, the risk of losses arising from fluctuations in market prices caused by factors independent of a security’s particular underlying circumstances.

Active Risk
Although the SMA is constructed to minimize tracking error relative to its benchmark, there is no assurance that the strategy will generate market returns within the estimated tracking error. Because the SMA is designed to capture investment returns associated with gender diversity, and high environmental and governance standards, the SMA may exclude, overweight, or underweight individual companies and/or sectors of the market. As a result, the SMA will not fully participate in the market returns of a general investment strategy. The SMA may over or under perform a general market strategy.

Sub-Advisor Risk
The success of an account’s investment through sub-advisors is subject to a variety of risks, including those related to the quality of the management of the sub-advisor and the ability of such management to develop and maintain a successful business enterprise, and the ability of the sub-advisor to successfully execute, operate, and manage the intended strategy at or below the target tracking error.

Business Risk
The fund’s strategy relies on key personnel, their expertise, relationships and networks. A loss of one or more key personnel may adversely impact the strategy.

Ellevest Intentional Impact portfolios give clients access to broad equity market exposure. The target tracking error for the portfolios is under 1.50%. Reporting on Ellevest Intentional Impact portfolios will be provided to clients no less than annually.

The minimum investment in Ellevest Intentional Impact Portfolio is $250,000. In addition to Ellevest’s advisory fee, the client will pay 0.30% of assets managed to the sub-advisor.

All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.

Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.

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