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

RIAs need to visit universities to attract students
RIAs need to visit universities to attract students

RIAs need to find universities that offer financial planning programs and sponsor or host events, advisor suggests.

Orion deepens Capital Group alliance with ETF portfolio tie-up
Orion deepens Capital Group alliance with ETF portfolio tie-up

The leading wealth tech provider is helping more advisors access active ETF models through its exclusive partnership.

JPMorgan client who lost $50M amid dementia battle denied trial
JPMorgan client who lost $50M amid dementia battle denied trial

Case of once-wealthy family highlights risks, raises questions on firms' duties to sophisticated investors suffering cognitive decline.

Stifel loses huge $14.2 million arbitration claim linked to star Miami broker
Stifel loses huge $14.2 million arbitration claim linked to star Miami broker

“The evidence in this case was overwhelming,” says an attorney.

$9B Gateway Investment Advisers names Julie Schmuelling president
$9B Gateway Investment Advisers names Julie Schmuelling president

The move marks the culmination of a decade-long journey for the new leader at the Ohio-based RIA and Natixis affiliate firm.

SPONSORED Leading through innovation – with Tom Ruggie of Destiny Wealth Partners

Uncover the key initiatives behind Destiny Wealth Partners’ success and how it became one of the fastest growing fee-only RIAs.

SPONSORED Client engagement strategies, growth and retention in the down markets

Key insights from Gabriel Garcia on adapting to demographic shifts and enhancing client experience in a changing market