Citi goes on hiring spree for financial advisers

Citi goes on hiring spree for financial advisers
CEO Jane Fraser cites the bank's push to expand its wealth management offerings around the globe, but says Citi will structure compensation so the bank's shareholders will have more power than the wealth managers.
JUN 04, 2021
By  Bloomberg

Citigroup Inc. has begun hiring financial advisers as the lender looks to expand its wealth management offerings around the globe.

The firm is structuring compensation for the newly hired advisers in a way that gives Citigroup shareholders more power than the wealth managers themselves, Chief Executive Jane Fraser said during a virtual investor conference Friday.

Generally, the wealth management industry has been moving away from commissions and toward a fee-based compensation model. Fee-based advisers often charge a flat fee for their services, while commission-based managers receive a payment whenever they sell certain stocks or funds.

“It’s a business where a lot of money is given out in compensation models,” Fraser said. “If you have a superb value proposition and an incredible platform, you’re able to give more of that money back to shareholders as you divide the pie up.”

Citi has since announced it would sell its retail banking operations in 13 markets across Asia and Europe and instead focus on building out a series of wealth hubs in the regions. Citigroup is hoping the renewed focus on the world’s wealthiest individuals will help improve the firm’s returns, which have long lagged behind those of peers.

Citigroup, unlike competitors Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., doesn’t have its own asset management business. To Fraser, that’s an advantage because it means her wealth managers won’t have an incentive to sell the bank’s own financial products.

“So I’m not trying to push my own products at the clients to maximize manufacturing revenue,” Fraser said. “I’m just trying to serve the clients well.”

The bank is hoping to steer many of its wealth offerings to the leaders of businesses that already use Citigroup’s commercial-banking products. The company recently rehired Tasnim Ghiawadwala from Barclays to run the commercial bank, which has local operations in 30 markets around the world.

“You know, the UBSs don’t have that, the Credit Suisses don’t have that, the JPMorgans don’t have that, the local banks don’t have that across the different geographies,” Fraser said. “We’ve got the capabilities.”

Latest News

Despite economic pressures, Americans aren't giving up their summer vacation plans
Despite economic pressures, Americans aren't giving up their summer vacation plans

Survey finds vacation confidence at an all-time high, defying budgetary constraints and ongoing inflation in travel costs.

New Jersey court says restitution and disgorgement can both be used in securities fraud cases 
New Jersey court says restitution and disgorgement can both be used in securities fraud cases 

A New Jersey appellate court reinstates regulators' ability to seek both restitution and disgorgement in a securities fraud case involving unregistered investments and diverted investor funds. 

UBS loses Ocean Capital lawsuit 
UBS loses Ocean Capital lawsuit 

A federal appeals court has sided with activist investors in a closely watched proxy battle involving nine Puerto Rico municipal bond funds.

Fidelity National's $250 million investment in F&G Annuities survives Delaware shareholder lawsuit 
Fidelity National's $250 million investment in F&G Annuities survives Delaware shareholder lawsuit 

Judge rejects shareholder lawsuit targeting Fidelity's preferred stock deal.

Fintech bytes: Zocks inks new tie-up, Fireflies enters the scene
Fintech bytes: Zocks inks new tie-up, Fireflies enters the scene

The newest advisor-focused AI notetaker arrives with a low-price pitch for enterprises – but is it too little, too late to gain market share?

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.