Krawcheck: Want to Shrink Your Business? Ignore Women

Sallie Krawcheck, the former head of wealth management at Bank of America (BAC) and Citigroup (C), says advisors can ignore women and millennials “only if you’re happy to see your business grow stagnant and shrink.”

Giving a lunchtime keynote speech Thursday at the 2015 Morningstar Investment Conference (MORN) in Chicago, the former research analyst explained that women are set to control about 70% of the $40 trillion generational wealth transfer in the coming 30 to 40 years.

“We have a retirement savings crisis, that’s about $14 trillion in size, assuming Social Security and Medicare remain solvent, which they probably won’t,” said the chairwoman of Ellevate Network, a group for professional women.

“Yet women have more money and wealth and are on their way to controlling the majority of wealth in the country … and more wealth than most of us recognize,” she said.

They currently own some $5 trillion in assets, and another $6 trillion when the assets they jointly own with a spouse or partner are taken into account. “That’s $11 trillion, and that wealth is growing faster than [that of] men,” she said.

Still, some 80% of men die married, and 80% of women die single. “The retirement crisis is a women’s crisis,” Krawcheck explained. “We retire with two-thirds the money that men do and live longer by six to seven years.”

Fund Diversity?

Earlier this month, Morningstar released a study that found women manage just 2% of mutual fund assets and open-end funds. Men run about 74% of assets and 78% of funds; teams of both female and male managers account for the remaining assts.

Furthermore, the research group says less than 10% of all U.S. fund managers are women.

“It’s the same as it ever was, sadly,” said Krawcheck, in an interview after her speech. It’s about a loss of momentum in the field.

“It’s not a performance issue, but a cultural issue,” she explained. “We are all more comfortable hiring people like ourselves.”

“There’s less gender diversity in the field of equity analysts today than during my timeframe [with Sanford Bernstein],” Krawcheck said.

Advisor Weakness