Recent research suggests that women not only invest and save differently from men, they might also do it better.

So why, then, do women need a robo-advisor targeted towards them?

Amanda Steinberg, co-founder of Philadelphia-based WorthFM, a woman-oriented digital financial advice provider that will launch later this year, says she isn’t solely motivated by generalizations of women’s needs.

“What I found was that the way financial services are traditionally packaged and marketed doesn’t really resonate with females,” Steinberg says. “It’s not that women need different service or are better or worse at investing. It has nothing to do with whether one is born male or female, it all comes down to how we’re socialized.”

Even in 2016, many girls are still pressured to be dependent on external help, while most boys continue to be socialized to value self-reliance.

In Steinberg’s experience, women are less likely to be goals-oriented, too.

“Having a goals-based financial plan is the most logical way to be successful, but goals are only motivating to about a quarter of people in general,” Steinberg says. “If you’re trying to engage an audience around a concept that isn’t motivating to them, they aren’t going to reach their goals.”

The new platform isn’t the "pinking" of a product, like a disposable razor or a computer, done to sell it to women at a higher price. In fact, WorthFM’s color palette reportedly doesn’t include pink.

“The problem is that you have to find a way to talk to someone who is smart and competent and successful about something that they need to know about, but they know next-to-nothing about,” Steinberg says. “Women are more likely to be raised in an environment where they’ve been told that money isn’t their responsibility, so now there’s some guilt and shame built around what they don’t know about investing.”

WorthFM is being launched in partnership with Michelle Smith, CEO of New York-based Source Financial Advisors, which specializes in advising high-net-worth and ultra-high-net-worth women going through divorce.

“Obviously, investments and investing are gender agnostic,” Smith says. “Women regularly complain about the lack of clarity and the use of too much jargon in financial information and advice. We have to provide advice that meets women where they are and talks to them and specifically to their needs.”

Together, Steinberg and Smith have established Worth Financial Management to provide advice through the new platform, and have raised over $2 million in venture capital for WorthFM’s development and launch.

Steinberg is editor of Daily Worth, an online financial magazine for women with over 1.2 million subscribers.

The inspiration for WorthFM came from discussions with Daily Worth subscribers over the past seven years, Steinberg says.

“Being a media company, I could see firsthand where some of the disconnects were between women and their financial service providers,” Steinberg says. “I spent a few years talking to some senior folks at the traditional brokerages, but nobody was making the changes to their overall packages that I thought would resonate with women. Given the size of the opportunity, there was no way for me to fulfill DailyWorth’s mission to provide women with the best personal financial information without launching a robo-advisor.”

Daily Worth readers are young, averaging 38 years old, and middle earners, averaging around $78,000 in annual income — and 85 percent of them are interested in the new robo-advisor, Steinberg says.

WorthFM’s opportunity is clear — not only are many of Steinberg’s subscribers interested in the new practice, but women as a group are becoming financial decision-makers in a greater percentage of households. According to a 2015 study by Hemington Wealth Management, women are now the primary breadwinner in 40 percent of families, and in 95 percent of those families, a woman is also the lead financial decision-maker.

WorthFM is powered by highly customizable programming on Vanare’s digital wealth management platform.

“What Amanda and Michelle are doing really resonates with me,” said Vanare CEO Rich Cancro. “It’s not just about disrupting Wall Street, which is what we usually hear from robo-advisors, but a passion and energy towards serving this market segment... and that will resonate with the clients WorthFM is designed to serve. We believe in what they're doing”

After signing up for WorthFM, women will complete a 40-question survey to find their "money type" to describe their behavioral relationship with money, organizing them into five archetypes: the producer, the visionary, the nurturer, the epicure and the independent. Each client is a blend of the five archetypes.

Steinberg says that WorthFM differentiates itself from other robo-advisors through its messaging, which will focus more on building a relationship with clients and educating them about money than it will on account balances. As with the portfolio, the digital platform’s messaging will be tailored to each client’s money type.

“We’re more concerned about the confidence gap than the net-worth gap between women and men,” Steinberg says. “We want to focus more on their motivation to save than on their portfolio’s performance.”

In theory, WorthFM’s education and tailored messaging is more likely to keep women engaged than information about outperformance or downside protection, says Steinberg.

For the same reason, every WorthFM user will be given a portfolio selected from five simple models, and charged the same all-includive 50 bps fee regardless of portfolio composition or assets. Like most roboadvisors, it will focus on small-to-mid-sized accounts, the mass affluent, and the emerging affluent as its primary clients: women with less than $500,000 in investible assets.

WorthFM will launch as a simplified, streamlined tool, Steinberg says, and adjust to the needs and sophistication of its users with a primary goal of increasing their net worth by 30 percent over five years.

“In the long term, we’ll study the specifics of what our customers need and use that as guidance for how we change the platform,” Steinberg says. “We want to look at real data from our users, not simply anticipate and assume what they might want.”
Smith says that some component of human advice may also be included in the future.

As it matures, savers and investors may find that  WorthFM’s underlying algorithms, messaging and responsiveness attracts more than women.

“Women are woefully underserved by the financial services industry, we know that already,” says Neal Quon, CEO co-founder of tech consultant QuonWarrene. “I’m a fan of robo-style options, they’re a good way for someone new to investing and saving to dip their toe in the water. If investors of any type need help making smart decisions, we should be trying to provide them that assistance in any way they can receive it.”