Sallie Krawcheck’s “real career” started “just shy of 30,” she said, when she became a research analyst, she told IA in an interview.
“Every firm on Wall Street rejected me. Lehman Brothers rejected me about three times. Smith Barney rejected me because they didn’t think I’d work hard. I later fired that director of research,” she said.
After a few well-publicized changes, she purchased 85 Broads, the “unfortunately named professional women’s network” of about 35,000. The network started as an informal alumni network for women who worked at Goldman Sachs — originally at 85 Broad St. in New York — but with Krawcheck at the helm, the group is expanding its focus to include education.
Networking is the “No. 1 unwritten rule of success in business,” Krawcheck said, but the organization is also educating its members so “they have the tools they need to move themselves along to make themselves more successful economically and financially.”
Getting women more economically engaged is not a “nice to do,” it’s a “smart to do,” she said. “It’s [smart] for our business over all, where about half of affluent women have unmanaged assets; the industry will increasingly lose out as this demographic gets bigger and bigger and more powerful. From a company perspective, all the research shows that more diverse leadership teams substantially outperform less diverse leadership teams. From a broader economic perspective, if women were as engaged in the economy as gentlemen are, our economy would be up to 9% larger.”
Furthermore, the industry has “gone backwards” on the diversity issue, she said. The number of female advisors has gone up and down, “but they haven’t gone meaningfully up. They bounce a little bit up, they bounce a little bit down, but they have not had a steady march upward.”
To people who might argue the industry as a whole has shrunk, she was emphatic. “No,” she said bluntly. “The number of men has gone up.”
A challenge to the industry as a whole is to avoid becoming “a victim of its own success,” Krawcheck said. “As you watch the demographic that [advisors have] served so well become a smaller part of the population and a demographic that it has done not as good a job of serving--in this case women--become more important, [the industry] risks just fading away.”
Individual advisors face a similar challenge. “You stay with what you’re comfortable with, and why not?” Krawcheck asked. “If you have a practice that’s based around neurosurgeons and you really have that shtick down, why go after physicists? The challenge for the advisor is what is the trade-off of getting yourself out of your comfort zone?”
All advisors—male, female, established, next-gen—have inherent biases. “It’s not just ‘those guys,’” she said. “The challenge for advisors is they think they’re serving the whole family, but they’re actually serving the husband. When you tape them, they think they spent 40% of the time talking to the wife or the woman, but they didn’t; they spent about 15%.”
What about that niche advisors are starting to realize isn’t a niche at all? “Everyone has a women’s initiative and everyone has a women’s panel,” Krawcheck said. “We went past the ‘ignore women’ [stage]. The stage we’re now at is everybody is marketing to women, but nobody is really serving women; that’s a big difference.”
With its focus on networking and education, one specific challenge that 85 Broads could help female advisors overcome is the military-style career track some big firms have in place. “The success track that has been put in place for many of these women to be senior management can be almost military. Historically, some [firms] used military questionnaires to hire them,” Krawcheck exclaimed. “But also, the track as it exists today at a number of these firms is still that you move from branch to branch, and therefore you move your family several times. I never would have run Smith Barney or Merrill if I’d started as a trainee, because I wouldn’t have been able to move my family that many times.”
Krawcheck said of 85 Broads that the mission is “driven in good part because of my lessons learned about the importance of diversity.”
As for the name, “Oh, we’re definitely going to change it.”