Hiring a diverse group of people who have different backgrounds, education, and perspectives is how a person can stand out as a great leader in the financial services industry, according to Sallie Krawcheck, the former head of Bank of America’s Global Wealth and Investment Management division. 

During the first day of eMoney’s Advisor's Summit, which was held virtually on Monday, the CEO and co-founder of Ellevest, highlighted five lessons she learned on how to be a good leader in the industry. 

Diversity was the first one and it was not all about gender and ethnicity. Firms have to do a better job of looking for people with different backgrounds, experience, perspective, disposition, education, and personality type, she told the audience.  

She said that a diverse staff also brings a diversity of viewpoints, noting that such diversity was lacking in the subprime mortgage industry leading up to that sector's collapse in 2008.

“Nobody poked into it to get into those worst types of scenarios,” Krawcheck said. “In other words, there was, at the company, a lack of diversity of experience which in turn led to group think.” 

She added that hiring a diverse workforce is not easy.  

“It is much easier to go for culture fit, which means it’s someone who fits right in and doesn’t bring ideas that makes one feel uncomfortable and doesn’t bring up the awkward questions,” she said. 

Another trait of a good leader is the ability to differentiate a company from the rest of the industry or, as she referred to it, finding "the white space.” 

She cited her co-founding Ellevest, which is a firm dedicated to encouraging more women to invest in the markets.  

The firm recognized that the traditional wealth management industry was not properly working with women, she said. Ellevest also recognized that men and women handle money, investments, and risk differently, and saw this and the lack of attention paid to women as an opportunity, she said. 

“Ellevest looked at about 1,000 of these little differences and said, what if we build a business that centers on women,” Krawcheck said. “We built Ellevest centering on women, including investments by women into women, and we have found a white space.” 

Good leaders also should be able to recognize major trends, she said.

“There are megatrends in our industry and taking advantage of those megatrends is like going up an up escalator, [which] is so much easier than trying to go down an up escalator,” she said.

She cited technology and AI, saying both can be valuable tools for the financial industry.

“We have these ridiculous debates in the press and our industry about technology versus people,” Krawcheck said. “The answer is of course technology and people.” 

She said another major trend is investor interest in impact and ESG investing, which she said are drawing the attention of many women investors. Impact investing and ESG investing have evolved to where one doesn’t have to give up returns to invest with a conscience, she explained.

“Investing for impact and investing for returns leads to richer relationships, greater involvement by the client, and I think it’s a positive for the industry,” Krawcheck said.

In concluding her presentation on the traits of leaders, Krawcheck focused on the way leaders treat their employees. 

“I’m not saying there aren’t difficult decisions to be made and people will paint you in a certain way, but the cultures that we build and promote as leaders make a tremendous difference,” she said.