BofA's Krawcheck backs fiduciary standard

Best way to stop RIA growth is to put clients first, Merrill's boss says
APR 20, 2010
Big brokerage firms have only themselves to blame for losing market share to independent advisers, online brokers and regional firms, Sallie Krawcheck, president of Bank of America's global wealth and investment management division, said today. Specifically, she said the big firms' focus on recruiting and product sales — rather than client needs — has cost them customers. “Regulators are upset with us, the public is irate with us … and some number is bewildered by us,” she told colleagues at the Securities Industry and Financial Markets Association's private client conference today in New York. “Rather than focus on each other, we should shift our focus to our clients.” Ms. Krawcheck went on to say the industry should rise to the level of registered investment advisers when it comes to adopting a fiduciary standard. Clients have no interest in legalistic fine points of whether brokers should be exempt from the standard when advice is only incidental to their services, she said. But investors always expect to have their interests put first, whether they choose to pay through fees or commissions. Ms. Krawcheck, whose domain includes some 15,000 Merrill Lynch brokers and Bank of America's U.S. Trust private banking business, insisted that big firms can reverse their market share losses to RIAs by focusing on their parents' financial strength and service breadth. “This industry, with its historic culture of teamwork and putting the client at the center, still offers advantages to the client that others cannot, if we can bring the full capabilities of the firm to our client — the true holy grail of finance — and leave behind the old product push,” she said. RIAs are “terrific competition,” she said in an interview after her speech, but after the market collapse and financial crises of 2008, clients are a “bit nervous” about putting their money with independent firms. “They are very much looking for financial strength,” she said. Merrill Lynch, which was forced into Bank of America's arms last year after losing billions of dollars on complex mortgage-backed securities, will succeed by investing in people and technology, she said. Asked how she will construct an organization in which brokers, bankers and others across the vast enterprise work together — given how many such efforts have failed — she responded: “Watch us.” Ms. Krawcheck also told reporters that she will focus much of her wealth management expansion in emerging markets such as China, India, Indonesia and Brazil where the bank's commercial and investment banking units also are growing. “In 2010, 70 cents of every dollar of new growth will come from emerging markets,” she said in her speech. “Only 16 cents will come from the U.S.”

Latest News

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

Despite high marks on satisfaction, client acquisition a struggle for advisors
Despite high marks on satisfaction, client acquisition a struggle for advisors

With a majority find getting new clients a challenge, report suggests fee transparency as a way to foster trust among the unadvised.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.