February 12, 2014

Sallie Krawcheck: Why Women on Wall St. Are Going ‘Backwards’

The former head of BofA’s wealth operations discusses Yellen’s testimony and Barbie’s image of female perfection

Sallie Krawcheck speaking at an 85 Broads gathering. Sallie Krawcheck speaking at an 85 Broads gathering.

With Janet Yellen now at the helm of the Federal Reserve, former Bank of America and Citigroup executive Sallie Krawcheck has plenty to say about women in the largest banks — and it’s not very optimistic.

Sallie Krawcheck, the owner of women’s network 85 Broads, appeared on Bloomberg Television early Wednesday. When asked why, with Yellen at the Fed and CEO Mary Barra running GM, there is no similar figure in banking, Krawcheck replied, “Well it's not that we have even gone sideways as we have in corporate America, we've gone backwards.”

The reason? The crisis mentality on Wall Street.

“What I saw when I was on Wall Street is it's not, well, let's get rid of people who are different from us because they've got cooties. It's more, yeah, I know the numbers around diversity and the diversity adds to business results in theory — but we are in a crisis mode, and I need that person who I can trust today.”

In other words, what “research shows [is that] when we're under periods of stress, that person who you feel like, I see how that person can do the job, is typically someone who looks like you,” Krawcheck explained.

It’s worth noting that off-Wall Street banks like Wells Fargo (WFC) have women in high-level positions. Wells Fargo Advisors and the bank’s overall wealth management operation are led by Mary Mack. And Patricia Callahan serves as Wells’ chief administrative officer.

Krawcheck also points out that female clients “are unhappy with the financial services industry.”

They express this displeasure by leaving their financial advisors 70% of the time, she notes, often after her spouse dies or a divorce.

“And what we've found when I've done a ton of research on this, is that she will feel like the two of them [the male spouse and advisor] are talking to each other, and she feels that she's outside that circle,” Krawcheck said. “So there's an enormous opportunity in financial services, speaking to and solving problems for women.”

If she were an advisor, what would her top tips be?

“For men, please stop trading so much,” she explained. “For women, are you really taking on enough risk in order to get the types of returns you are going to need, because you’re likely to live about six to eight years after the guys do.”

Yellen’s Remarks

Krawcheck was somewhat neutral about Yellen’s first appearance before Congress, noting that her presentation was lengthy.

“I think the new style here is to do as long a testimony or press conference as you can," she said. "And I think it boils down almost to, nothing to see here, move along, nothing to see here, because the comments were steady as she goes. There's going to be continuity. And even this comment, which is worth noting, is along the lines of, geez we have to continue to be creative and think creatively because we're at extremes.” 

Krawcheck did give Yellen credit for trying to push politicians for new approaches to U.S. economic issues. “She did encourage Congress to do something. I think we would probably all agree the chances of that are slim.”

Speaking of slim, Krawcheck’s Bloomberg interview touched on other, lighter topics concerning women, such as Sports Illustrated magazine and the 50th anniversary of its swimsuit issue, which featured a cover image of Barbie.

Krawcheck’s reaction? “I don’t know what to say. What year are we [in]? “The idea of perfection, of having a look that no one in the world can ever have. It is a terrible message for young ladies.” 

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