At Envestnet event, Sallie Krawcheck alludes to Crager alliance, blasts women-as-niche marketers and edges perhaps closer to endorsing the RIA model

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].”

un-Linked

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.