Citigroup Shifts Financial Advisers to Fees From Commissions

October 5, 2009 by · Leave a Comment
Filed under: Industry News 

Wall Street Journal, New York – Monday took a step toward defining how it wants to serve Main Street.  The bank announced it is changing the way its financial advisers operate; those 600 advisers who work within Citibank branches, and who remained when the bank combined its Smith Barney brokerage with Morgan Stanley’s brokerage in a joint venture.

Citi decided to rid itself of commission-based advice and will charge clients a fee of about 1% of invested assets. It will give clients who want wealth management services through Citibank branches the option of working with Citi’s own financial advisers, or of choosing independent advisers with whom Citi will begin to form relationships, and who will pay Citi a fee for the referral.

Citi is in advanced discussions with some of the nation’s top independent investment adviser businesses and expects to announce agreements in select markets in the near future, Deborah McWhinney, the head of personal banking and wealth management, said in a press release.

The changes are part of Citi’s effort to, in the words of Ms. McWhinney, “put the customer back into Citi.” Rather than focusing on complicated trading products, Citi wants to collect deposits and move money for households and businesses; rather than pushing products, it wants to sell service, it says.

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