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Women are pulling ahead of men as the biggest holders of personal wealth in America, and the gap is widening. Still, the $8 trillion they own is usually invested by men, who handle the vast majority of funds under management.Sallie Krawcheck went as high in Wall Street’s ranks as any woman has ever gone, holding top positions at a number of brokers, and most recently headed Bank of America’s Wealth & Investment and Management division, which includes Merrill Lynch and has over $2 trillion in assets, before a shakeup left her on the outside.
Today she is a startup consultant and comments frequently on consumer banking issues on LinkedIn. She talks with U.S. News about the disconnect between women and Wall Street, and how to fix it.
Are women better than men at managing money?
There has been quite a bit of research that claims to show that women are “better” investors than men. What is clear from the research is that women are more conservative investors than men. So that has been a winning strategy in the tough markets of this century. Whether that holds up in more robust markets, like this more recent bull market, remains to be seen.
How else do men and women differ when it comes to money?
Women tend to be more conservative in their investments. They tend to trade less. And they choose a financial adviser more slowly than men to. As a result, male financial advisers may give up on winning a woman as a client just when she is about to say yes! That said, once a female commits to a financial adviser, she tends to be a more loyal client than her male counterpart
Is there any reason women should want to have female financial advisers?
generalising about whether women want women financial advisers is a tough one. What I mostly hear from women investors is that they don’t think of investing as a game. Many don’t think of it as a fun pastime. For them, it represents their safety and security and the lifestyle that they want to have. Financial advisers who recognise this, and who connect with women on these issues, will be the most successful, regardless of their gender.
Should more women be pursuing careers as financial advisers?
Absolutely. Research has shown that women are client-focused, so this career track can be a very successful one for women. Interestingly, however, the large brokerage firms have stalled out for years at about 17 per cent women financial advisers. On the other hand, private banks can be closer to 50 per cent. A hypothesis for this difference is the greater team orientation of the private banks in serving clients rather than the traditional “sole practitioner” model for the Big Four. [The largest integrated financial firms: Merrill Lynch, UBS, Morgan Stanley Smith Barney and Wells Fargo.]
Is a female wealth manager better off going to an independent firm and building a following outside the Big Four or trying to work at one of the big firms in which women remain very large investors?
A woman—or any adviser, for that matter—can be successful in either. It is a question of what type of technology, investing, training and brand support she wants and needs. Each firm is somewhat different in this, though the broad strokes are certainly similar.
Financial advisers whose salaries are based on the assets they manage certainly don’t want to give any of that up—so how do women break in?
Well, the pie can certainly grow, so it doesn’t have to be a matter of some advisers giving up assets to other advisers. The need for financial advice in this country is absolutely clear.
Would it help Wall Street’s business to have more women in those roles?
It certainly may help to get more women into adviser and management roles. It will also help to educate male financial advisers on how women may think about and approach money differently.
What is Wall Street doing to change?
There has been a great deal of change in how the large firms assess and hire financial advisers. Would you believe that one of the large firms used to use a questionnaire from the Marines to assess candidates’ suitability for the financial adviser role? As you might imagine, they attracted a certain type of individual, but not an overwhelming number of females!
What about women in leadership roles?
Another key to attracting more females is having more females in leadership roles. There has been some progress here, but much more is needed. Many women opt out of leadership roles because they have traditionally involved moving one’s family from city to city, to take on bigger and bigger office management responsibilities. These firms have to find a different way if they are serious about this issue.
This story was originally published by U.S. News & World Report.
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