Restoring Merrill’s mojo: Krawcheck’s calling?
Kenneth Lewis, Bank of America Corp.'s embattled chief executive, gave a trenchant analysis of the state of banking — and the brokerage business, in particular— this week when he announced that former Smith Barney boss Sallie Krawcheck will run the bank's global wealth and investment management sector.
Kenneth Lewis, Bank of America Corp.’s embattled chief executive, gave a trenchant analysis of the state of banking — and the brokerage business, in particular— this week when he announced that former Smith Barney boss Sallie Krawcheck will run the bank’s global wealth and investment management sector.
“Changes in the structure and requirements of the financial services industry are causing us to re-engineer businesses,” he said in a statement detailing Ms. Krawcheck’s arrival and other management shifts. “Customer behavior is evolving, requiring new products, services and delivery methods.”
Mr. Lewis, whose credibility has come under sharp attack as a result of buying Merrill Lynch & Co. Inc. in January without disclosing its rapidly escalating, multibillion-dollar credit-related losses, offered no public prescription for Ms. Krawcheck to follow. It’s fair to say, however, that her job — which includes running New York-based Merrill’s shrinking brokerage franchise — will not be easy.
Last year, the market share of adviser-managed assets held by wirehouses slipped to 47.7%, from 48.5% in 2007, according to a report released last week by Boston-based consultant Cerulli Associates Inc. At the same time, market share for independent advisers grew to 32.8%, from 31.6%.
Ms. Krawcheck, 44, is smart and charming — and, according to Mr. Lewis, who is 62, she’s one of a handful of Bank of America and Merrill executives competing to succeed him “at the appropriate time.”
But on top of the challenges any outsider faces in reassuring and motivating a new crop of nervous direct reports and their employees, she and all wirehouse executives have major structural and market issues with which to contend.
It’s a formidable challenge given the fact that Merrill’s top-retail executive, Dan Sontag, submitted his resignation last week.
For the complete news analysis, see the upcoming Aug. 10 issue of InvestmentNews.
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