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Sallie Krawcheck is a woman with a cause. She has a solution to the retirement crisis and a strategy for advisors to
grow their female client bases.
Increasing the economic engagement of women in the workforce will avert the pending retirement savings crisis, she
said. It will provide women with the necessary tools to manage their increasing wealth and provide advisors an
opportunity to grow their businesses in an underserved market.
Krawcheck sees her solutions as a win-win-win for women, the economy and the advisory profession. She spoke to an
audience of advisors during lunch at the Morningstar Investment Conference in Chicago on June 25th.
Krawcheck is the chair of Ellevate Network, the global professional network with thousands of women from across
industries. Ellevate Asset Management has partnered with Pax World to create the Pax Ellevate Global Woman’s
Index Fund, the first and only mutual fund of its kind, investing in the 400 top-rated companies in the world for
advancing women. These businesses are united in the recognition that investing in women is simply smart business.
Krawcheck is the former president of the Global Wealth & Investment Management division of Bank of America.
Krawcheck said her female-centric solutions would help alleviate the following paradoxes:
The U.S. is the wealthiest country but also has a $14 trillion retirement savings crisis.
U.S. women’s wealth is growing faster than men’s, but the retirement crisis is worse for women
who outlive their male counterparts and are poorly served by the advisory profession.
Women are the target market opportunity to alleviate the above paradoxes. Krawcheck attempted to open the eyes of a
largely male audience. She prefaced her female-centric thesis by stating that she “loves middle aged white
guys and has actually been married to a couple of them.”
She reminded the audience that women have more money and control more wealth than most recognize; women in the U.S.
control $5 trillion with their spouses and another $6 trillion on their own. Women’s wealth is growing faster
than men’s, and women are well on their way to being the majority of U.S. millionaires. Despite their growing
wealth, the retirement crisis is worse for women, who retire with two thirds the wealth of men and outlive their
male counterparts by eight years.
It is a female crisis. While 80% of men die married, 80% of women die alone. In addition, 80% of nursing homes
residents are female.
On increasing the economic engagement of women
Krawcheck offered three solutions to increase the economic engagement of women: allow women to stay in the
workforce; close the gender pay gap; and create stronger management teams by including the diversity that women
Krawcheck cited a Goldman Sachs study showing that the economy could grow by 9% if women stayed in the work force
longer than they have historically. That, plus closing the pay gap -- where women currently earn 77 cents to each
male dollar -- would close one-third of the social security funding shortfalls and fund women’s 401(k)
accounts. Krawcheck said that her experience has shown that more diverse management teams make better decisions
rather than “the kind of management teams that finish each other’s sentences.” Gender diversity in
management teams has proven to be equated with higher returns on capital, higher returns on savings, lower risk,
greater long-term focus and greater innovation.
Krawcheck is skeptical of the effectiveness of the “lean-in” movement pioneered by Sheryl Sandberg. It
offers women the ongoing inspiration and support to help them achieve their goals in the workplace as the solution
to adding gender diversity to corporations. Instead, Krawcheck said, “The power of diversity is diversity.”
She advised against taking diverse people and “telling them to act like the majority,” but instead
allowing people to act as they do. She acknowledged that it is much easier to encourage and coach women to get
proper pay raises than it is to get a company to research and change traditional gender views toward embracing and
Public-policy action for mandated parental leaves is required to keep women engaged in the workforce. Krawcheck
offered that other than Papua New Guinea, the U.S. is the only country not to have mandated maternity leave. Policy
makers and corporations need to recognize the research that says that the longer a woman has for maternity leave,
the more likely she is to return to the workforce. Having women return to the workplace is a significant step toward
closing the retirement gap, she said.
On increasing the financial engagement of women
The majority of wealth held by women today is invested in cash or short-term securities, and 86% of women say that
the advisory profession is not serving them well whether they have an advisor or not. The 66% of women who do have
an advisor are unhappy with that person, and 70% of women will leave their financial advisor within one year of
their husband’s death. In contrast, a study by Merrill Lynch showed that 90% of men say that the advisory
profession serves them well.
Krawcheck offered the following five strategies for advisors to better engage women:
Women want to be talked “with” and not talked “at.” Women want their concerns
listened to. They want to be part of the conversation and engaged with. They do not want to be overwhelmed
with jargon such as basis points or alpha.
Risk should be a major focus in discussions with women because they have a “major bag-lady syndrome”
and would rather keep large amounts of money in bank accounts than risk losing it through investments. Women
focus on risk and value wealth preservation seven times more than they value upside gains.
Women are looking for a holistic view, not just of assets but also of themselves. They view their greatest
asset as themselves and the net present value of their future earnings. Thus the highest investment return a
woman can make is bridging the gender pay gap and earning the equivalent of her male counterparts. Women are
far more interested in an advisor coaching them on how to get a pay raise than they are interested in market
returns, savings rates and asset allocation.
Women are goal-oriented and want to know how they can send their kids to college, how they can afford their
homes and how they can retire well. Women are not interested in many of the traditional metrics such as how
portfolios did against the market.
Women believe in values-based investing where “doing good” can be equated with positive returns.
Krawcheck said that it used to be that environmental, social and governance (ESG) investing could not
produce returns in accord with other alternatives. It was an “either-or” decision where you
either made ESG investments or you were well rewarded with profits. More recently women are
rejecting “or” and replacing it with “and.” Women want to have a fair return and a
positive impact through their investment decisions.
Krawcheck raised a call to action to the advisor audience to stop focusing on the existing male market. She said
this is a mistake because there aren’t many more opportunities for new clients in the older male population
who don’t already have an advisor. It is also a mistake to look at the advisory markets for women as a niche
Krawcheck concluded that if advisors focus on this market, they will bring positive solutions to the retirement
crisis, they will bring sidelined capital to the markets and -- through values-based investing – they will
bring capital to issues that positively impact the world.
In recognition of the problem of underserved women and confident in her solution, she asked the audience, “Isn’t
this the reason we got into this in the first place?”
Justin Kermond is the vice president of business development for Advisor Perspectives.
Read more articles by Justin Kermond