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Sallie Krawcheck Says Female Investors Ignored,

Points To Opportunity
valuewalk.com /2015/06/sallie-krawcheck-says-female-investors-ignored-points-to-opportunity/
Mark Melin
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issues of doing the right thing in a corporate setting and the true value of diversity to a much deeper
level.

Sallie Krawcheck: Stop using jargon


While 90 percent of high net worth men are happy with their advisor, 2/3 of women say they are not
happy with their financial advisor, Sallie Krawcheck noted, reaching back into her storied career in the
Wall Street asset management business. Then she pointed to the business opportunity: When man
dies, 70 percent of women change advisors and most of the investment money tends to find its way
into cash.

Without explicitly saying it, she noted an identifiable target market with a specific need. Next was
explaining how to execute a
strategy to capture this flag.
Outlining a landscape where
male advisors generally ignore
the needs of a female spouse,
Sallie Krawcheck said that
after a husband dies, women
change their financial advisors
due to a lack of satisfaction in
the relationship. Women want
to be talked with not at, she
advised. Stop using jargon
and relate to them by
discussing their life goals.
Address money from the
Krawcheck
standpoint of a life goal, not
just discussing performance.
Focus on value-based investing and bring holistic thinking to the table. Women are rejecting either / or
decisions and want to have an (social) impact and not just get returns.
Then she pointed to a key issue that perhaps more male investors should consider, particularly at this
upside/down moment in economic history. Women value wealth preservation seven times more than
the upside potential, yet most product research is focused on upside returns capture, not downside
risk management. She recommends that financial advisers stress test a portfolio under the worst
experience possible. She might also want to throw in an understanding of non-correlated investing,
which would be the perfect inclusion in this business plan.
But Krawcheck not only thinks about business opportunity, but also a wider world in which she wants
not only influence, but the right kind of influence.

Doing the right thing can have a cost


Sallie Krawcheck is the former president of the Global Wealth & Investment Management division of
Bank of America, which includes the Merrill Lynch and U.S. Trust and is the largest wealth
management business in the world at $2.3 trillion in client assets. She is a rare pioneer, an early
female success story in a decidedly chummy, male dominated environment. In the press briefing after
her speech she told a story of a woman standing up in a corporate meeting with senior executives,
telling truth to the old boys club for their own good, and essentially saying the emperor has no cloths. It
didn't matter that the truth would help the executives manage better. Truth sometimes has a cost and
being a yes man in the old boys club has its career enhancing benefits.
The truth, even if it is required to correct a problem and steer the ship along the correct path, can be
troubling to some. In a overwhelming white, non-diverse "Harvard" culture, independence that points to
doing the right thing is often crushed, which speaks to Sallie Krawcheck discussing the power and
benefit of true diversification in a management team and on a board of directors.
Even though she recognizes that it is easiest to select people just like her to work with, it is more
effective to have a diversity of opinion and those with true backbone to challenge assumptions and
poke holes in plans. Such is also the theory of operation at Bridgewater, perhaps best known for using
intellectual confrontation and radical transparency to drive what has become the most successful
hedge fund in the world based on assets under management.
But doing the right thing and getting punished for it by controlling forces, Krawcheck remains

undeterred as she eyes the next major issue in the economy.

Sallie Krawcheck: Solve the retirement crisis through female financial engagement
Sallie Krawcheck had two epiphanies in her life, one of which being that there is a retirement crisis in
the U.S. and the answer is financial engagement for women.
The U.S. is the wealthiest of all nations, she said, but there is a $14 trillion retirement saving crisis in
the U.S., pointing to a retirement savings gap that assumes social security and medical benefits are
solvent, "which they are not.
The underfunded retirement crisis, and funding gaps for government entitlement programs such social
security and Medicare programs can be solved in part through financial engagement with women, she
said. If the female pay gap and engagement gap is closed, (the unfunded liability problem) is closed
by one third, she said. If women stay in the workforce longer the economy can grow by an additional
five percent. Increasing economic engagement of women is good for all.
Speaking truth to power. Will they listen?
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