Speaking recently to the Financial Women’s Association, Krawcheck challenged the financial industry to stimulate economic and investor growth with common sense, creative thinking and good advice.
"The stock market always holds risks, but we are not looking for a double dip," Krawcheck said, adding that flows into bond funds have been significant, so there’s room left in the equity markets. Investors, she said, would be well advised to look at opportunities around the world to get better returns.
"The real secret to investing is asset allocation," she said, adding, "it may not be the most fun to talk about at a cocktail party, but it works."
Lending is another issue. Krawcheck acknowledged that many small businesses have suffered "near death" experiences in the financial crisis and are looking for more credit and liquidity. Banks want to help small- and medium-sized businesses, but will lend when they know they’ll be getting their money back.
When will Wall Street regain investors’ trust? "It won’t be because of a marketing campaign," Krawcheck said, adding: "We have to work in the best interest of our clients every day and help them when they face situations where they could lose money. That’s when we’ll see a rebound." While many investors say they can’t trust Wall Street, Krawcheck said that Bank of America research shows that 85% of people are happy with their financial advisor.
And what does Krawcheck have to say on Wall Street compensation levels? "It’s clear that compensation in certain areas is out of whack. We should provide incentives for appropriate behavior and have a more long term focus of business," she said.
Women make up 50% of the workforce, so why don’t banks cater more to women, an audience member asked Krawcheck. "No one has hit the right mark yet," she said. "Women are not looking for a bank in pink. They want to be spoken to genuinely. Financial service firms need to educate male financial advisors that they are speaking to the whole family, not just the husband," she added.
Now is the time for women to step up, Krawcheck said, adding: "We’ve had a real crisis and it’s not good enough anymore to just be role models. We need to take on more responsibility and help each other along."
The bottom line, she said, is "there is no substitution for hard work." Krawcheck admitted that she doesn’t have a good work/life balance. "You don’t have to do it all, she said, adding that the support she gets from her husband and family has helped her succeed. Krawcheck said she never formally had a mentor, but learned lots of lessons from supervisors. "Feedback is a gift," she said, adding that everyone should look for feedback on an ongoing basis, not just once a year. And when corrective criticism is given, it should be received graciously. "People are willing to help and you’d be surprised what you can learn if you ask questions."
Following your gut instincts is crucial, she said. Krawcheck said that she didn’t bother to listen to people who said that she would never come back to Wall Street after leaving Citigroup. "I could have traveled the world, but that’s not my personality," she added. She did take a few afternoon naps with her cat and dreamt about next steps, but then she started "networking like a fiend." One day, the phone rang and it was Sanford Weill, the former head of Citigroup, who spoke to her about her current position at Bank of America.
"What doesn’t kill you does make you stronger," Krawcheck said. "So don’t give up, don’t give up, and don’t give up!"
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Pam Snook, 917-544-1923, pamvsnook@gmail.com, www.pamsnook.blogspot.com
