Having been fired by Bank of America recently and with no plans announced about her future, Sallie Krawcheck, who turned around several high profile financial services businesses before her failed stint running wealth management at Bank of America, spoke her mind at yesterday's conference organized by the Securities Industry and Financial Market Association.
Krawcheck was undoubtedly invited to speak at yesterday's conference organized by the Securities Industry and Financial Market Association long before she was fired on September 6 from her job as the head of Bank America's wealth management division, which includes Merrill Lynch and manages $2.3 trillion in client assets.
Perhaps it was her newfound freedom that allowed Krawcheck to speak her mind about the lack of trust clients now have in large institutions, and Krawcheck's sobering words for the big banks should be heartening to independent advisors.
If anything, Sallie Krawcheck warns that investors are more "disappointed" with the institutions than in the ground-level advisors.
The reasoning behind her comments are obvious: years of scandals, failure, bailouts, and outright brinksmanship have caused deep damage to once-golden brands.
Merrill Lynch, Morgan Stanley, Goldman Sachs, UBS, Wells Fargo are now seen by many Americans as part of the problem with the economy, not part of the solution to their own financial problems.
And those are the survivors! Bear Stearns is almost forgotten now, but Lehman Brothers will live on as long as we keep talking about a bad week in the market as "the worst since 2008."
These firms might need scandal-free years to repair their public images, if they ever do. In the meantime, their traditional selling point -- their national brands -- seems to be as much of a liability as an asset to advisors who can actually prospect for clients on their own and keep them happy.
Since the wirehouse compensation system revolves around how lucky the advisor is to ride the big brand, we are likely continue to see more wirehouse advisors strike out on their own.
Independent advisors are a bit provincial. The independent advisor industry is hung up on issues affecting this little narrow channel of the financial advice business. This is myopic and fails to pick up on the the fundamental fact that independent are still mainly competing against the wirehouses.
Krawcheck comments recognize this. Clients still love advisors who do good work, focus on customer service, and provide holistic financial planning approaches. In other words, they love the kind of advisor that most people in the independent channel aspire to be.
That's an opportunity. Try to stay focus on competing against the institutional behemoths that have disappointed investors time and again.