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

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut
RIA moves: Modern Wealth tops $8.5B AUM as Aspen expands in Connecticut

Modern Wealth's latest deal for a California-based fee-only RIA marks its fourth acquisition of 2025.

Empower defends private market access in 401(k)s in response to Warren scrutiny
Empower defends private market access in 401(k)s in response to Warren scrutiny

Sen. Warren has warned of private market investment risks due to opacity, illiquidity, and past regulatory issues.

AI is gaining traction with buy-side equity traders and may be an unstoppable force
AI is gaining traction with buy-side equity traders and may be an unstoppable force

Use of the technology is growing and asset managers see transformative benefits.

One fifth of Americans are expecting an inheritance but are too many relying on it?
One fifth of Americans are expecting an inheritance but are too many relying on it?

Research reveals expectation could be replaced by disappointment.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.