Elizabeth’s note: Fred St Laurent, managing director of recruiting firm SCI Partners, was recently interviewed by a reporter for Bloomberg BusinessWeek. In the course of talking to the reporter about hiring conditions on Wall Street, St Laurent realized that there was a story to tell about Sallie Krawcheck from the recruiters’ point of view. We’re happy he offered to tell it on RIABiz. Look for the article in BusinessWeek next week. One final note: St Laurent does not recruit for Merrill/ Bank of America, he tells us, and so has no agenda to promote the company.
In 2008, when Sallie Krawcheck left Citigroup, New York Times Journalist Geraldine Fabrikant wrote:
“In an era when the executive suite is still dominated by men, it’s tempting to attribute Ms. Krawcheck’s downfall to the ruthless vagaries of the glass ceiling. As it turns out, however, her departure from Citigroup was largely the result of an old-fashioned corporate bar brawl at a bank already notorious for dysfunctional management.”
Krawcheck came back from that brawl, resurfacing as Bank of America’s president of Global Wealth & Investment Management. She leads Merrill Lynch’s thundering herd. See: Merrill Lynch brokers brace for sweeping comp changes as Sallie Krawcheck departs BoA and takes her advocacy with her.
Her comeback should be no surprise. In the end when push-comes-to-shove, she’s been the problem solver of Wall Street, and now she’s doing it again at Merrill Lynch.
Most people I talk to don’t know much about Krawcheck’s background. She was the Homecoming Queen of her Charleston High School and earned an MBA from Columbia. She started her career at Salomon Brothers, and then took a break to rear her first child.
She took up again with Sanford Bernstein, where she eventually rose to be CEO.
As the dot.com bubble burst, Citigroup was having trouble with its image and stock valuations. Executives wanted to avoid the appearance of a conflict of interest between the investment banking and the wealth management groups. They recruited Krawcheck in to solve their problems, as the CEO of Smith Barney.
There is an important detail to notice here. Krawcheck was brought in to solve a problem during economic turmoil, which would become a pattern for her career.
She not only solved Citigroup’s issues; she did so in less than two years.
Krawcheck was responsible for 13,000 brokers as CEO of the “new” Smith Barney unit. As a recruiter, I can tell you that during this time it was difficult to recruit financial advisors out of Smith Barney.
The stories in the media said Krawcheck could be abrasive and caused animosity within the ranks. I do not doubt that she rubbed some the wrong way. But the end result was that she made it difficult to recruit from Smith Barney: she was accessible and provided people with what they needed for their clients. This was not good news for recruiters. When she was CEO, few brokers would consider leaving the firm.
In 2004, she was asked to step in as CFO and head of strategy of Citigroup. The man she was replacing was rumored to be in an unsuitable relationship, or was using funds inappropriately. I do not need to repeat more than that — I mention it because it is important to understand that Krawcheck was asked to take care of another problem.
She faced a media storm while doing so. Some said that she was taking a “demotion,” but the reality was that this job is what the company needed her to do at that time. Sallie Krawcheck stepped in the gap again, and got the job done.
In 2007 the Citi Private Bank was thrown out of Japan for sales practice issues. Advisor turnover was at an all-time high. The good news for recruiters was that the compensation plan at the time was creating opportunities.
Sallie was asked to step in again to fix the problems. She managed the combined Private Bank and Smith Barney units, working hard to change the culture and pay plan to one that ended up being the best on the Street.
This, of course, was bad news for recruiters.
Just over a year later, in 2008, after months of bickering with the CEO of Citigroup about the stand she had taken that the company should reimburse money to clients for bad research and products sold, she was e-mailed a notice that her walking papers were about to be delivered.
This was handled badly by the management of Citi, in my opinion. As a recruiter I have heard many stories about how people leave or are asked to leave firms. Looking back on how Sallie had stepped up to tackle and solve problems for Citi, every time she was asked, I have to say that this exit strategy was cold and imbecilic.
Smith Barney advisors were not pleased about what happened to Krawcheck and neither were investors. This was the wrong move at the wrong time for Citigroup. But when it comes to recruiting Smith Barney brokers, her departure was and has been excellent news for recruiters!
We all know what happened to the economy in 2008. We experienced an engineered, financial tsunami of biblical proportions.
Enter Bank of America and all of the cultural and compensation model issues that crop up when you merge a bank this size with a wirehouse the size of Merrill Lynch. What you have is a great opportunity for recruiters, right?
But NO! Look! Up in the Sky! It is a bird, it’s a plane! NO! This is a job for Sallie Krawcheck.
Krawcheck was invited to run BofA’s wealth management group (Merrill) and she is again stepping confidently into the vortex.
As she is hammered by a firestorm of criticism by the media and Merrill management, she has become the eye of the storm and is quietly putting the pieces together to build a first-class wealth management organization. It’s “déjà vu all over again” to use a Yogi-ism
Krawcheck is getting the job done. I am hearing this from brokers all around the country. They tell me that she is accessible and proactive.
She is a recruiter’s nightmare in that she fixes the problems and seriously puts the clients and brokers first. She is making it very difficult for recruiters to find unhappy brokers at Mother Merrill.
Fred St Laurent is managing director of SCI Partners, an Atlanta, Ga.-based recruiting firm retained by RIA firms, credit unions, banks and mid-sized financial institutions to recruit brokers and advisors. St Laurent has been recruiting for more than 20 years in the financial services industry. He leads teams on large projects and has developed a strong reputation for training recruiters. He also writes articles and speaks at major industry conferences about staffing and sales-related issues.
For another article by St. Laurent, see: The hidden dangers of hiring a laid-off Merrill broker