Krawcheck: Clients still like advisers, but not their firms

According to Sallie Krawcheck, investors are happy with their financial advisers; they just don’t like the firms that their advisers work for.

“Clients continue to like, trust and admire their financial advisers. In terms of client satisfaction, we’re within spitting distance of where we were before the financial crisis,” Ms. Krawcheck said at the Securities Industry and Financial Markets Association’s annual meeting in New York last week.

“However, they are disappointed with the advisers’ institutions,” she said.

Eight weeks since losing her job as head of global wealth management at Bank of America Merrill Lynch, Ms. Krawcheck was interviewed by PBS journalist Charlie Rose at the conference.

“In some ways, the industry is in better shape than conventional wisdom would have us believe,” she said. “And in other ways, we still have risks and challenges to confront.”

The industry still needs to home in on financial planning and client service, rather than just investment performance, if it wants to regain the trust of investors, Ms. Krawcheck said.

“We’re still not talking enough about planning and liquidity management, and protecting against the downside,” she said. “Surveys indicate that investors want their advisers to help them with a financial plan and they want them to return their phone calls.”

‘WE NEED TO STEP BACK’

Wall Street needs to step back from the culture of crisis that it has operated under for the past several years, Ms. Krawcheck said.

“Years and years ago, the markets went from being arenas for capital allocation to being betting mechanisms. We need to step back from that,” she said.

Women and younger investors particularly haven’t been well-served by the industry, Ms. Krawcheck said.

“The next generation is not coming into the markets. Everything they’ve seen tells them they don’t want to be in the markets and they don’t trust these guys,” she said.

“It’s a significant challenge for the industry,” Ms. Krawcheck said.

She also expressed dismay at the still relatively small number of women working on Wall Street. In the wealth management industry, about 16% to 18% of advisers are women.

Ms. Krawcheck recalled speaking to women at a Harvard Business School event recently.

“I felt sad that 25 years on from when I was at university, we weren’t further along [in terms of female employment],” she said.

Ms. Krawcheck doesn’t see the economy improving rapidly anytime soon.

“It’s hard not to walk around a little depressed about things. We’re in a period of deleveraging, and coming out of this downturn is different,” Ms. Krawcheck said.

And until investors get some good economic news, they will continue to be skittish about the markets, she said.

“You hear investors saying, “I didn’t know I had to be worried about U.S. and European government debt.’ If it’s not one thing, it’s another,” Ms. Krawcheck said.

“It’s hard to be confident to get back in the market, given the situation,” she said.

In contrast to many of her peers, she sees the greater involvement of regulators in the industry as a potential positive.

“The regulators are much more of a presence in the industry now, and deservedly so,” Ms. Krawcheck said. “It may be tougher to get things done, but it’s not such a bad thing for the business.”

Ms. Krawcheck didn’t address her recent departure from BofA or her plans for the future.

Email Andrew Osterland at [email protected]

Related Topics: Merrill Lynch, Securities Industry And Financial Markets Association (SIFMA), SIFMA