Krawcheck: Accept the 'f[iduciary]' word

The securities industry should accept fiduciary responsibility in advising retail clients, said Sallie Krawcheck, chief executive of Citi Global Wealth Management in New York. “The industry has been uncomfortable with the 'f' word,” Ms. Krawcheck said, but the fear of taking on fiduciary liability is “not rational. ... It's what clients tell you they want.” Ms. Krawcheck made her remarks today in a speech at the Securities Industry and Financial Markets Association annual meeting in Boca Raton, Fla. She criticized the securities industry's opposition to the successful legal action by the Financial Planning Association to overturn the so-called Merrill Rule, which exempted fee-based brokerage accounts from the Investment Advisers Act of 1940. “I would have thought the Street would have seen this [lawsuit] for what it was--a fantastic opportunity to expand the securities business into the fiduciary model,” Ms. Krawcheck said. “I think the FPA might lose the war here,” she added. “Until now, the only differential advantage between [financial planners and] Wall Street Street was the fiduciary model. But the FPA has just forced $300 billion [of fee-based brokerage assets] into the advisory model.” Ms. Krawcheck was one of several individuals elected to SIFMA's board yesterday.