The former wirehouse exec is satisfied with her own 'gal about town' status but not 'Republican' tendencies of financial advisors

May 7, 2013 — 4:27 PM UTC by Lisa Shidler


Brooke’s Note: Sallie Krawcheck is still playing hard to get in the world of financial advice where she belongs in spirit — the progressive and accountable RIA business. But while we continue to chide her on that point, we also like more and more what she’s doing, who she’s hanging out with and what she’s hinting at. I’m also seeing more and more courage. See: Sallie Krawcheck, A Recruiter’s Nightmare. Who else could get away with some quality scolding of the Republican Party in front of what was no doubt an Envestnet conference crowd peopled by plenty of elephants?

You had to listen carefully — like the hopeful revolutionary listening to a speech given by a Chinese dissident — and to be an afficionado of comments related to the emergence of new ways of providing financial advice.

Even then you would not come away certain of whether Sallie Krawcheck is the Switzerland of financial advice dignitaries or a chameleon whose comments never get past camouflage.

Krawcheck, who has headed the global wealth management units of both Citigroup and Bank of America Merrill Lynch. spoke before 1,000 attendees at Envestnet Inc.'s Advisor Summit Conference and addressed a handful of reporters, including this one, afterward with plenty of opinionated statements — but few that could be regarded as a stand on who or what is offering better financial advice. See: Envestnet breaks out ENV2 to oohs, aahs and a few groans at its bust-out event in Chicago.

More than a handful of attendees were attuned to whether the RIA business was in line for its first breakaway from the highest echelons of Wall Street advice. After all, Krawcheck was speaking to a crowd, and on behalf of a company, that are eagerly building a parallel universe of independent advice that they believe beats wirehouses on every level.

During both her public and private talks, she said that independent firms have achieved technical parity with wirehouses.

Nimble and pivoting

“The competitive advantage for financial services companies has always been scale, scope, size and heft,” she said. “I believe we’re moving toward an environment in which forward-looking nimble firms and being able to pivot is becoming increasingly important. I’ve really enjoyed getting to know firms like Envestnet who are looking to change financial services.”

Krawcheck said that the RIA industry could house some of the industry’s next leaders.

“Technology is changing everything, and the impact for our industry is truly significant,” she said. “I’ve thought about where the leadership is going to come from in our industry as the big firms work to find there way out there, and it’s really with people like this at Envestnet who are really focused on advisors and clients.”

Contrast that statement with one she made in the waning days of her career at Merrill Lynch.

“I think the common wisdom [that many advisors are seeking independence] is dated,” she said. “Clients are looking for firms with financial strength and broader capabilities to better navigate the next period of turbulence. What we’re seeing now is independent advisers asking how they can join us because they’re hearing how much we’re investing in the business.”

So is her spring thaw toward independents an indication that she is warming toward a deeper relationship with Envestnet, a company with ambitions to be — and progress toward being — the back office to a mighty swath of the independent advisory universe?

A Crager and Krawcheck alliance

She still maintains that she hasn’t decided on her next move. Krawcheck doesn’t have a formal relationship with Envestnet but said she has enjoyed talking with its president, Bill Crager, in recent months about the firm’s initiatives.

But that doesn’t mean she thinks independent advisors are perfect. Krawcheck still had harsh words for the advisors and had no problem criticizing them on their lack of social-media savvy as well the way they treat female clients.

White guys talking to white guys

As with her compliments to the industry, Krawcheck was upfront with her critique “My intention is to be somewhat controversial and make all of us somewhat uncomfortable here,” she said.

She urged advisors to recognize that times have dramatically changed and that the same old static way of doing business won’t work any longer.

“I worry our industry will become the Republican party — with middle-age white guys talking to middle-age white guys, saying that we need to change, but when push comes to shove deciding that things are probably OK as they are. That’s what I worry about for our industry, and particularly the big [firms].”


One of her chief concerns is that advisors aren’t embracing social media because of fears of compliance and regulation.

“It’s not going away,” she said. “Social media is here to stay. If you’re not on social media, this could be a real problem. “See: Early adopters of social media, RIAs are growing disenchanted with its power to drum up new business.

Krawcheck gave some compelling examples of how industry leaders and advisors have lost business because they refuse to get on social-media sites.

For instance, she said a marketing executive asked her for some recommendations of venture capitalists. Krawcheck gave her some, but one of the VC firms refused to speak with the marketing executive because she lacked a LinkedIn profile. See: How to use LinkedIn to win more business in your niche.

In another case, Krawcheck was approached by a client with $10 million in assets who was seeking an advisor. Krawcheck reached out to an advisor she had known for years, but his LinkedIn profile wasn’t updated so she couldn’t contact him. As a result, she passed the prospective client on to another advisor.

“Your client base is already on social media,” she said. “Social media can be a negative if you’re not there, but it can also be positive and you can show you’re an expert.”

She also pointed out that social media has helped equalize independent firms with the giant wirehouses. When she first went to Merrill Lynch, she said, it felt like “Christmas Day” when the client survey report arrived on her desk every week. Now, she points out, all firms can survey their clients pretty easily, thanks to social media.

“Now, everyone can get that information,” she said. “Simply by asking people who are quite willing and eager to provide it,” Krawcheck says.

Too many tweets?

Krawcheck acknowledged that social media has its quirks. “If you’re on Twitter and watching feeds go by — they’re awkward. It’s like when you were in high school and your dad was dancing in the corner at the high school dance,” she said. “People do these tweets that all say 'look at me. Look at me” rather than making it a conversation and a discussion.” See: Sallie Krawcheck clues in green advisors about choosing that all-important first gig.

Krawcheck gave some pointers on how to use social media and encouraged advisors to interact with people on sites such as LinkedIn or Twitter. She also said she enjoys writing opinion pieces on LinkedIn because they don’t get edited and do get posted in a timely fashion. Plus, she enjoys interacting with readers.

She encouraged advisors to write pieces on their LinkedIn pages.

But she gave a warning to advisors and said there are still a handful of advisors who write nasty comments to her and forget that their post includes their name.

“Watch your tone,” she urged. “It’s OK to be funny, but please don’t be angry. Every time I publish something, I get an angry financial advisor who blasts me. I message the advisor privately and they always say, 'Oh I forgot it wasn’t anonymous.’ If I can see it, your clients can see it too.”

Women aren’t a niche

In addition to lagging behind on social media, Krawcheck said, advisors as a whole are still doing a pretty terrible job working with female clients.

She said that one of the industry’s worst problems is looking at women as a “niche” when in fact they make up the majority of the population and are more often than not breadwinners. Often, she observed, women are much more successful financially as they grow older, especially compared with men. To illustrate her point, Krawcheck referenced Hillary Clinton, House minority leader Nancy Pelosi and television executive Pat Mitchell. See: Sallie Krawcheck talks tough — and with disarming openness — online about the glass ceiling and lip gloss.

“While you’re retiring and having heart attacks on the golf course, we’re sending kids through college,” she said.

She feels that many advisors are fooling themselves if they think they’re serving the entire family.

Krawcheck says that after years of observing client meetings, she’s learned that male advisors often spend most of their time talking to the man and nodding occasionally at the woman. “When the meeting ends you say, 'did you engage the wife,’ and the advisor will say 'absolutely,’ but if you ask the wife, she will say, 'absolutely not.’” See: How a suddenly wealthy, young Bay Area widow found her RIA after months of fruitless efforts.

Younger generation is at risk

Krawcheck also fears that advisors aren’t prepared to work with younger investors. In addition to honing their social-media savvy, she said, advisors also need to understand these younger investors are quite risk-averse. “They’ve grown up with every bit of press coming at them and all evidence that Wall Street is evil. They may be as risk-averse as someone from the Great Depression.” See: Sallie Krawcheck clues in green advisors about choosing that all-important first gig.

Mentioned in this article:

Envestnet Inc.
Top Executive: Jud Bergman

Share your thoughts and opinions with the author or other readers.


Jeff Spears said:

May 7, 2013 — 5:02 PM UTC

I hope Sallie breaks away and joins a RIA.
The gating issue is $
She probably made $5-10 million/year at BofA. That would be hard to replicate at a conflict free RIA!


Stephen WEinks said:

May 7, 2013 — 6:00 PM UTC

It is not that Krawcheck is beginning to warm to independents from her wirehouse perspective. It is she understands the brokerage industry, both wirehouses and independents, must evolve and neither are there yet. The consumer’s best interest is not being acknowledged or supported by either brokerage format. Thus, Krawcheck’s views are very consistent. Presently the industry is addressing none of the professional development challenges which support professional standing because of its fear of fiduciary liability. This requires professional management.and know how not possible in a brokerage format.

Fifteen years ago, my guess was that Jamie Dimon was the most likely candidate at Shearson, Lehman, Hutton to support fiduciary counsel, before he moved to fame and fortune at JP Morgan.

Krawcheck was the only major firm executive that had the guts to support fiduciary standing of brokers, for which she has paid a heavy price, as not being on the team.

Could it be that Sally Krawcheck is the industry executive that actually embraces the advances in exoert authenticated prudent investment process, advanced technologfy, work flow management that mades advice safe, scalable and easy to execute and manage as a high nmargin business at the advisor level. None of this is possible in a brokerage format and Krwacheck knows it. She also knows properly resourced advisors can provide an unprecidented level of investment and administrative counsel at a lower cost than a packeage product while increasing broker compensation by 50% . This is disruptive innovation in the consumer’s best interest—that every broker and every advisor is attracted to because, given the option, consumers will choose it every time.

Do Krawcheck and Envestnet understand the vulnerabilities of our klargest brokerage firms as high cost low value added solutions?

I think we are going to find out pretty soon.

Sally now knows who her friends are now, which greatly benefits the consumer, the advisor and the industry..



Paula Johnson said:

May 7, 2013 — 6:44 PM UTC

As a former advisor and branch manager, I find it not only refreshing but personally liberating to see Sallie have the courage and credibility to be honest and dead on. The industry has survived for decades ignoring women whether it be as clients/advisors/managers/executives.

Camouflaging the marketing campaigns with the latest “niche” target will not work. Authenticity works. Clients are more savvy and women have always been focused on what matters most – those who care most about them and their needs, wants and desires.

It is not going to be business as usual moving forward. Let’s hope that Sallie continues to use her voice and her insight to educate the public and that the industry will get her message. Jeff, I’m guessing that the money is not the issue for her. I will wager that Sallie will find the home that aligns most with her values and integrity and that appreciates her acumen. If not, I will enjoy listening to her wisdom from the sidelines.


Brooke Southall said:

May 7, 2013 — 6:52 PM UTC


You write very fluidly. Consider becoming an RIABiz columnist.

I think you’re right. But I think Jeff is right, too. No, money won’t be her guide but, yes,
making $200k a year isn’t going to be enough.




Paula Johnson said:

May 7, 2013 — 7:08 PM UTC

Sure Brooke and having met Jeff, I know he has a real pulse on things. I’m just holding onto the crazy notion that money will not be her lure. Thanks for the posting and the opportunity to engage.


April Rudin said:

May 9, 2013 — 1:17 AM UTC

Go Sallie Go. I feel your pain. Wall St types are, for the most part, baby-boomer aged guys who don’t like change. These men reinforce each other in refusing to embrace a world which is ever-rapidly changing around them. Oh, and women are not a niche. I think that now I will advise my wealth management clients to look at “men as a niche”... Go Sallie Go.


andrea said:

May 20, 2013 — 1:44 PM UTC

“ This was not an article about the ria model. It was another attempt at publicity and a bias attempt to excite her NICHE. What is her niche? Ironic enough its women.

She said that one of the industry’s worst problems is looking at women as a “niche” when in f act they make up the majority of the population and are more often than not breadwinners.”

FALSE men are still by far the lead breadwinners

Often, she observed, women are much more successful financially as they grow older, especially compared with men.

What does this even mean? where is the axis here, where is the “successful” cross over point. How is this measured and confirmed?

To illustrate her point, Krawcheck referenced Hillary Clinton, House minority leader Nancy Pelosi and television executive Pat Mitchell

No man holds similar or higher positions?

Women are a niche market, so are men, so are doctors etc. The fact that she ignores this shows she is selling to her niche market….women.

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