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.”
The Carmel, Indiana RIA grew nearly 150% in assets since severing ties with its first backer following a FINRA dispute.
Meanwhile, Raymond James' employee arm adds a defector from D.A. Davidson, and South Carolina-based RIA Ballast Rock Private Wealth recruits a new advisor.
A FINRA arbitration panel sided with a former wealth manager fired over a $642 deli platter and a disputed client event.
From disruptive AI to a looming advisor shortage and an impending migration of clients amid the Great Wealth Transfer, every headline of crisis hides an industry-defining opportunity.
New ICI research shows savers approaching retirement are most likely to ditch the glide path for a more personalized approach.
As $84 trillion prepares to change hands, advisors who treat estate planning as peripheral are quietly building a sieve, not a book.
In volatile markets, the advisors who win aren't the ones with the best calls - they're the ones whose clients stay the course.
