BofA’s Krawcheck Tells Women: No Risk, No Reward in Investing

Merrill Lynch Wealth Management hosted the final webinar in a series of five retirement-themed programs late Thursday. The webinar was moderated by former ABC News anchor Charles Gibson and featured Sallie Krawcheck, head of Bank of America-Merrill’s global wealth and investment management unit.

According to BofA, more than 3 million unique viewers have tuned in for these live and on-demand webcasts since April. The discussions were taped in front of a live audience.

In addition to Gibson and Krawcheck, Thursday's event included comments from David Bach, a personal-finance expert and author; Kay Koplovitz, founder of USA Network and chairman of Liz Claiborne; and Hanna Rosin, founding editor of Slate.com’s women’s site DoubleX and a contributing editor to the Atlantic magazine.

Make Plan to Increase Risk

“Planning is hard – it’s no fun, and it’s painful, not relaxing,” explained Krawcheck (left). “Men force themselves to do it more than women do.” Given the strides women have had economically and other trends affecting them, though, women need to do more planning, she adds: “Women live longer, and living longer is expensive.”

“Women retire today … with about two-thirds of the assets that men do. They earn about 75% compared to men and lose [financially] when they go in and out of the job market,” she explained. “They also earn less from investing, because they are more conservative investors.”

While this style of investing hasn’t hurt women investors to date, it could -- especially if they do not retire with enough savings, Krawcheck explained. “To have the tailwind from equities can be helpful,” she said. “There can be a benefit to taking on more risk.”

In general, women – like all investors – need to be cognizant of their biases when investing and make that part of the planning process. “So work with an advisor that you trust, who is aware of that and who can prod you to take some risk,” Krawcheck said. “Over long periods of time, the more risk, the more reward.”

In addition, women should be looking at financial products that can “give them a headache,” she notes, like annuities and long-term care insurance. “To have the ability to annuitize an income stream can help those who have longevity risk.”

“Women are, by nature, good planners and this can play to their strengths,” said Hanna.

“I never hear from women who are panicked about the market or want to follow stock tips,” said Bach. “In my experience as a financial advisor, women make better clients and refer much more than men do.”

Long-Term FA Relationships

For advisors, Krawcheck noted, there are some definite advantages to working with women. “We love all of our clients equally,” she said, “but women tend to have relationships that last longer with an advisor.”

Women, however, tend to take longer to choose an advisor. “We tell advisors not to give up,” Krawcheck concluded.