Citi is the latest financial institution to launch a retail-facing robo-adviser.
Like other digital advice platforms, Citi Wealth Builder puts investors into one of six ETF portfolios based on their answers to a questionnaire assessing risk tolerance, retirement goals and current savings. Portfolios are designed and managed by Citi’s investment team and are automatically rebalanced by Wealth Builder.
Wealth Builder requires a minimum $1,500 investment and charges a 55-basis-point advisory fee, making it one of the more expensive robo-advisers in terms of management fees. However, customers with Citi Priority status (at least $50,000 in a bank, retirement or brokerage account) and clients of the bank’s wealth management program, Citigold, will have the management fee waived on their first portfolio. Additional accounts carry the 0.55% fee.
Wealth Builder is powered by Jemstep, the digital advice technology vendor Invesco acquired in 2016.
“We have worked closely with Citi to configure the Jemstep digital advice platform to provide a compelling client experience that supports Citi’s unique value proposition, omni-channel delivery capabilities and robust operational and compliance requirements,” Jemstep president and CEO Simon Roy said in a statement.
As a key part of its consumer bank growth strategy, Citi has intensified its focus on wealth management recently. In 2019, Citi eliminated trading commissions on ETFs and new-issue U.S. Treasury products for Citigold clients and introduced a new digital financial planning tool, Citi Wealth Advisor.
A Citi spokesperson said results have been strong, with retail banking AUM up 20% and digital deposits growing by $6 billion.
With Wealth Builder, Citi is hoping to reach emerging affluent clients, but it is far from the only bank using technology to chase next-generation investors. Competitors including JP Morgan Chase, Wells Fargo, Bank of America, US Bank and Morgan Stanley all have digital advice products.
Even Goldman Sachs, which traditionally only served the ultra-wealthy, is planning to add a robo-adviser to Marcus, its digital bank for the mass affluent.
"Digital advice products, pioneered by startups like Wealthfront and Betterment, are successfully expanding the market for professional money management to the mass affluent and new-to-investing segments,” David Goldstone, head of research at Backend Benchmarking, said in an email. “Firms can no longer wait to introduce wealth management services until clients have met minimums of $250,000 or more.”
“Firms who do not introduce wealth management early may run into [a] client pipeline issue as many investors will have an existing relationship in place by the time they are wealthy enough to be attractive to a traditional advisor," Mr. Goldstone added.
Frank Bonanno, managing director of StoneCastle Cash Management, said banks like Citi are using cash as a “gateway asset class” to win clients away from traditional RIAs and broker-dealers.
“This highlights how banks are getting in the wealth management space and the importance for advisers to capture held away cash,” Mr. Bonanno said in email. “Otherwise, in this case with Citigroup, advisers’ clients that maintain balances with $50,000 or greater at the bank (which are many) will be targeted aggressively with solicitations like this.”
"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.
Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.
Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.
Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.
The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
