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Tom Keene asked Sallie Krawcheck, Merrill Lynch’s former Wealth Management CEO, a really awesome question when she was Bloomberg TV this morning.What would she tell a 27 year-old banker asking her for career advice? Where should they go?
Krawcheck has worn a lot of hats on Wall Street — CEO, research analyst and more — so she really knows her stuff. She told Keene that she thought there would “always be an opportunity in wealth management” because one of our nation’s issues is that people don’t save enough for retirement.
And when people realise that fact for themselves, she said, they want a personal relationship with someone who will help them figure everything out. For the most part, Americans are too invested in this country and not enough in emerging markets etc.
People need guides. So, in short, there will always be a future for bankers in the wealth management sector.
Sounds optimistic. But the industry as a whole, said Krawcheck, is going through a “secular change.” And, yes, she means something just as ominous as that sounds.
Here are some of the darker things she said about the future of banking:
“Make no mistake, Dodd-Frank took entire revenue streams from some of the these companies and what we really don’t know is…with the Volcker Rule and without proprietary trading how much of the bottom line did that drive? Because propietary trading for the institutional business is akin to net interest income for the retail business…. These two revenue streams drive a tremendous amount. What is on the top line falls almost completely to the bottom line. So they really support an enormous amount of profitability and jobs within these organisations.”
So yeah, watch what happens when the prop traders are really all gone.