Citi Wealth has agreed to place $80 billion in client assets under BlackRock's management as part of a sweeping partnership that will see the world’s largest asset manager take on a broader role in managing portfolios for Citi’s global wealth clients.
The move, announced Thursday, underscores a growing trend among major banks to outsource investment management to specialist firms while sharpening their focus on client advice and financial planning.
Exemplifying that trend is another deal between Goldman Sachs and T. Rowe Price, also unveiled Thursday, with Goldman taking a $1 billion stake in the giant asset manager as they partner to launch new private-market offerings.
Under the agreement with Citi, BlackRock will leverage its portfolio construction and customized model portfolio expertise to manage a range of core, opportunistic and thematic investment strategies spanning equities, fixed income, multi-asset class strategies, and eventually private markets.
Citi’s private bankers and investment professionals will also gain access to BlackRock’s Aladdin Wealth technology platform, which offers advanced risk, portfolio management, and data insight capabilities.
The transition is expected to begin in the fourth quarter, pending customary approvals, and will involve certain Citi Investment Management employees moving to BlackRock, though they will continue managing existing strategies for Citi clients.
Citi Wealth clients affected by the change are based in nearly 100 countries and will continue to work with their Citi private bankers for overall wealth planning and asset allocation.
Andy Sieg, head of wealth at Citi, said the partnership aims to combine Citi’s relationship-driven advice with BlackRock’s investment expertise and technology.
Sieg said the new offering “brings together the sophisticated relationship-driven and market-based advice of our bankers, backed by the insights of our own Chief Investment Office, with the renowned investment expertise and innovative technology capabilities of BlackRock.”
For BlackRock, the deal represents a significant inflow of assets and the potential to expand its reach in private markets. The firm is targeting $400 billion in cumulative private-markets fundraising by 2030, as it seeks to diversify revenue streams amid ongoing margin pressure from lower-fee index strategies. In June, BlackRock announced plans to include private assets in its retirement plans, which now account for more than half of the company’s managed money.
Sir Robert Fairbairn, vice chairman at BlackRock, said the firm was selected to bring its investment solutions and technology to Citi clients, enabling the bank to deliver “customized portfolios and strong investment outcomes across wealth.” He added, “As investor appetite grows for custom built, whole portfolio solutions, BlackRock continues to invest in our global investment platform to stay at the forefront of clients’ evolving needs.”
The partnership aligns with Citi CEO Jane Fraser’s ongoing efforts to streamline operations and boost profitability in wealth management, following several years of restructuring and job cuts.
Christopher Marinac, director of research at Janney Montgomery Scott, told Reuters that the move allows Citi to “get further efficiency gains very quickly since this outsourcing can drop expenses.”
The announcement comes as BlackRock reported record assets under management of $12.53 trillion in the second quarter, up from $10.65 trillion a year earlier. However, the firm’s long-term net inflows fell to $46 billion, down nearly 10% from the previous year, reflecting industry-wide pressures to adapt to shifting client demands and lower-fee products. BlackRock’s total revenue rose to $5.42 billion, driven by a 6% rise in organic base fee growth, though that still put it slightly short of analysts’ expectations.
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