It hasn’t taken long for Debbie McWhinney to make her mark at Citigroup. On October 5, Citi Personal Wealth Management announced that the brokers who operate in Citibank branches will change their compensation models immediately from commissions to fees, embracing a fiduciary standard. McWhinney, the former chief of Schwab Institutional who became head of Citi Personal Banking and Wealth Management in April 2009, said in an interview on October 6 that there are “four million households that do business with Citibank North America,” and that the bank was taking the step to “align us with where the markets, and clients, are going.” The move will also allow Citibank to have a “deeper relationship” with its existing customers. Would the new approach also attract new customers to Citi? “Absolutely,” McWhinney says with a laugh, “You don’t think I’m going to run something that’s a slow-grow business, do you?”
As part of the initiative, McWhinney said the bank will put together teams “rather than 550 individuals,” referring to the brokers who remained in Citigroup’s bank branches following the merger of Smith Barney with Morgan Stanley’s brokerage force, to better serve the “type of clients Citi has–urban households, many of whom are professionals and business owners,” with whom the bank could do “much more business.”
In each bank, she explains, there would be an investment consultant who would perform an initial needs and risk assessment, and who would then steer potential clients to either those in-house teams, to a Citi online or call center, or to an independent RIA. Having presented the client with those options, the investment consultant would then take the step of even accompanying the client to the first meeting, telling the client, she said, that “I’ll go with you and help you ask the right questions.”
McWhinney said the Citi teams would use either Fidelity or Pershing’s custodial platforms–”I’m talking to Charles and Mark,” she said, referring to Charles Goldman at Fidelity Institutional and Mark Tibergien at Pershing Advisor Solutions. Those Citi brokers would become investment advisor representatives of Fidelity’s or Pershing’s RIA, depending on which firm Citi chooses.
While at first “we’ll be using the SmithBarney platform,” she said, “we want to move off that platform,” she said, onto a more open, “institutional-style” platform that would “accommodate their fiduciary business” in an ongoing “partnership with the bank.”