Wall Street trailblazer recalls her net worth declining by 80%

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Sallie Krawcheck talks about her big money mistake

Sallie Krawcheck,  who has been described by some as the “most powerful woman on Wall Street”, has shared the one mistake she made which resulted in her losing 80 percent of her net worth.

The founder and CEO of Ellevest, a digital financial advisor, shared her “big money mistake” while speaking with Bloomberg Quicktake.

During the interview, Mr Krawcheck cited her time at Citigroup as being when this error took place.

Specifically, she highlighted how the Great Recession from 2007 to 2009, and the decisions she made during that time, resulted in her losing her job.

Much of the wealth she had acquired in her professional career was tied up in her role with the investment banking company.

The interviewer asked the Wall Street trailblazer what is the one big mistake she has made in her career.

In response, Ms Krawcheck said: “I failed to diversify. I did not diversify, diversify, diversify, the equity as part of my compensation from Citigroup.

“I was getting paid at Citi, as much of the senior leadership team was, and much of the bonus was in stock.

“As I got the stock, I never sold very much of it. As a result of that, my net worth going into the financial crisis of 2007-08 was Citigroup stock, stocks and my job.”

She was expected to work and earn more over that period but as her stocks went down, the businesswoman realised her job would be at risk.

As she was building her equity and wealth, Ms Krawcheck made “one bet” on the financial services industry.

With this business decision, the Wall Street expert saw her net worth by more than 80 percent leading up to the recession and during it.

Despite having equity from other places she had worked, Ms Krawcheck was unable to rely on previous shares.

The entrepreneur added: “That got rolled into Citi stock. You take a job in a new place, often on Wall Street, they will buy out your unvested shares from the company before.

“The story just keeps getting worse. It wasn’t just that I was paid in Citi stock or had equities in my portfolio or my job went away, it was that the wealth I had built had accumulated into Citi stock.”

As well as this, Mr Krawcheck shared there was an “implicit” rule within Citigroup not to sell out.

On when she realised how bad a mistake she had made, the CEO shared how she saw video footage of herself on the news.

She said: “Sitting at my desk, we always had the business news in the background.

“I look back at the TV and I think, ‘That woman is about to lose her job. That woman: great outfit. Oh wait, that woman is me.’

“You haven’t lived until you can really feel how your stomach can drop all the way to your toes.”

Ultimately, Mr Krawcheck did leave Citigroup with her stock in the teens after the new CEO at the time invited her to leave.

Since leaving the firm, the businesswoman headed up the Bank of America’s Global Wealth and Investment Management division before becoming the CEO of Ellevest.

During her two years at Bank of America, her division led the financial institution to $3.1billion (£2.4billion) in profits.

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