Can Sallie Krawcheck Hold It Together Over at Bank of America?

Sallie Krawcheck
Sallie Krawcheck

Sallie Krawcheck, head of Bank of America's wealth management division, has a reputation on Wall Street for being smart, charming, and impeccably honest.

But her job—squaring the circle between Merrill Lynch's brokerage culture and BofA's banking culture—presents what business strategy types call a non-trivial challenge.

('Non-trivial challenge' is management speak for a job in which you are at least as likely to fail as to succeed.)

Investment News provides the history of Krawcheck's many successes on Wall Street—before arriving at the point, quoting Elliot Weissbluth, head of the independent boutique HighTower: "The whole concept of cross-selling between a North Carolina bank and Wall Street brokerage works elegantly on a spreadsheet. But a Merrill adviser ultimately rails against the idea that he needs to push BofA products."

Weissbluth adds that he's been hosting meetings with Merrill brokers: "Any reasonable Merrill manager knows his people are looking around."

The Investment News piece also quotes Carri Degenhardt-Burke, a headhunter who runs a firm called Degenhardt Consulting:

"'They're [Bank of America]pushing them to cross-sell and to move accounts.' She adds that half of her incoming calls are from Merrill brokers interested in the big signing bonuses being paid out by rivals UBS and Morgan Stanley Smith Barney. 'Sallie Krawcheck has a really tough job,' Degenhardt-Burke says. 'The hardest, I think, of anyone on Wall Street. The BofA and Merrill cultures just don't mesh well.'"

A second executive search specialist named Mindy Diamond adds that some competitors, in their efforts to recruit Merrill brokers, are offering those who are willing to jump ship packages valued at 350 percent of their trailing 12 month earnings.

Such incentives notwithstanding Krawcheck says the broker attrition rate is down to 10 percent—from a four-year average of 14 percent.

Despite the culture clash, some brokers claim to appreciate the new arrangement.

One broker —who runs a $4 billion book of business—tells of how he recently helped a client finance a $43 million private jet: "For the first time in my career I was able to call an aviation specialist at my own firm and arrange a deal in five days," he says.

Even so, the story has something of a one-off feel to it—factored in to add a little balance to the account of legions of Merrill brokers, chafing under the new cultural regime of a big bank, and contemplating their options for the future.

But perhaps the most interesting point raised in the interview is Krawcheck's end game – which, as it turns out, is the one question she does not offer a response to.

Handicapping the probability of Merrill being spun off in its own right, the article observes of Krawcheck: "She wins either way—as a star in the BofA empire or as the CEO of a stand-alone Merrill brokerage. She has no doubt crunched the numbers and fielded the question from both her brokers and those she is recruiting."

When asked directly about her plans for the future, with regard to a possible spinoff, the Investment News article recounts the following: "Krawcheck knows it's an inevitable query, and she betrays a small smile and leans forward to answer it—until one of her corporate PR people objects to the question and cuts her off."


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