Citi PWM Exodus

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burtonfinancial1's picture
Joined: 2008-09-30

After firing 75+ of their lowest producers and some individual movement here and there, Citi is down to about 500 FAs give or take a few.  Although some have already left here and there over the last 3 weeks, the bulk of the flow of FAs out the door is about to accelerate. It's been a month+ since Citi shocked the troops with news of their new platform, team concept and compensation plan. Most smart FAs are well into the due dilligence process and offers are happening. Moving sticky bank clients is always challenging, but those I'm hearing from believe it'll be much easier now vs. later once they've integrated themselves into new teams in 2010. Watch this Friday 11/20 and Wed next week right before Thanksgiving.  Movement on those 2 key days will start the flow out that will continue up through 12/18 when FINRA closes for the Holidays. Where are Citi FAs going? The masses are moving in 3 directions. Wires like Merrill and Wells Fargo Advisors are aggressively pursuing the quintile 1 & 2 producers. Regionals like Stifel Nicolaus are also taking advantage of Citi's blunder. Wells Fargo Bank and PNC are by far the top destinations in the bank channel although lower producers are finding some love at local state and regional banks.  Independents like Raymond James and others are also seeing some independent minded top producers heading in their direction. Have more intel or an opinion to share?   My bet is 25% are gone by the Holidays. Another 25% will stall and delay into Q1 and ultimately leave once the harsh realities of the brave new world at Citi become clear!  I'm being very conservative, but my hunch is those who lack the confidence to make the move now will get bogged down in their new 'teams' and move out of desperation later in 2010. 

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B24
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I don't think it will be tough to move clients if you have a mostly transactional book and you explain to them that they are now required to pay asset fees.  I think those FA's will have the easiest time moving their book of anyone.

MrBig's picture
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I agree that Citi has never presented a better time to leave, and burton, I think you're right that the exodus will continue... especially as team splits are addressed. May work well if you're the senior advisor of the team, but otherwise... it just depends on you and your business.

I think if a team can get it together, do it the right way, work well together and bring in the assets, then there's no limit. Especially as more and more leave.

burtonfinancial1's picture
Joined: 2008-09-30

Tell me if I'm right here or not.  Those moving here in the coming months will have little resistance as FAs blitz out the door. Stick around 6 months and you'll have a whole new battle on your hands when you try to pull assets out and face stiff resistance from your former team mates' who remain.   I know for a fact hiring authorities (managers, etc)  recruiting Citi FAs right now have figured that out as well. 

MrBig's picture
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I think it really just depends on your own business and if you think you're able to make the change of business structure (assuming you aren't already there). If you're a transactional advisor, and you like being that way, then go and likely have an easy time moving your book.

If you're fee-based it may work well for you.

I'm fee-based, have great relationships, my clients value my personal advice and not that of the firm, and know I'll be fine either way.

aurence's picture
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Joined: 2009-11-18

You guys are missing the point; the problem with this new plan is the very essence of being a broker; the firm completely owns the clients, hence they are forcing brokers to join teams and are combining all the brokers accounts. Then the payout will decrease like initially stated by a 30% target and will all become salaried employees. And the greatest problem is that at the moment only a name change occurred from Smith barney to CPWM, they are all still brokers not Charles Swab 1800 customer service representatives. Going all managed money should be left up to the brokers and the clients and not the institution.

I think what CITI is doing is pure communism and it failed in the real world, and in CPWM it will also fail. I also think MSSB is not considering other options when it comes to hiring CPWM brokers because I think 80% of brokers will leave CITI under these conditions. MSSB is missing a great opportunity. I think MSSB should buy the assets and the brokers from CPWM because they have a 100% success rate to keep the clients, some clients still receive their statements with the Smith barney name on or access their account through www.smithbarney.com.

Shameful all that is happening.

exUBS's picture
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Joined: 2009-04-23

They are trying to turn brokers into Trust Officers- interchangeable salaried employees.

burtonfinancial1's picture
Joined: 2008-09-30

aurence wrote:You guys are missing the point; the problem with this new plan is the very essence of being a broker; the firm completely owns the clients, hence they are forcing brokers to join teams and are combining all the brokers accounts. Then the payout will decrease like initially stated by a 30% target and will all become salaried employees. And the greatest problem is that at the moment only a name change occurred from Smith barney to CPWM, they are all still brokers not Charles Swab 1800 customer service representatives. Going all managed money should be left up to the brokers and the clients and not the institution.

I think what CITI is doing is pure communism and it failed in the real world, and in CPWM it will also fail. I also think MSSB is not considering other options when it comes to hiring CPWM brokers because I think 80% of brokers will leave CITI under these conditions. MSSB is missing a great opportunity. I think MSSB should buy the assets and the brokers from CPWM because they have a 100% success rate to keep the clients, some clients still receive their statements with the Smith barney name on or access their account through www.smithbarney.com.

Shameful all that is happening.I think you've figured it out!  Flash forward 2 years+ after transition has fully occurred and life at Citi for an "FA" is going to look much more like it does today for a Schwab advisor than not.

shantom1's picture
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Joined: 2009-10-28

I agree with your views.  If there is one thing Citi has proved over the years it is that they will always make poor decisions and it will usually be against the advisor.  Anyone hanging on b/c they think things will get better, they are a team leader, they think the clients wont follow etc are in for long term punishment.  The industry has watched as Citi has used the program as a petri dish, always making the wrong decisions.  The problem is management has never once sat in the chair and spoke to a client.  Without that fundamental knowledge of how our business works they are doomed to fail.  Like the Citipro that Ed Munin spent $10mm on to Malik Sawars' prism models, they all sound great in the widget invention rooms but fail miserably in the real world.  Get back a Bill Maguire or a Howard Hammond and now you are talking.  People will follow them and work themselves to the bone b/c they believe in their leader (and know he has their interests in mind) and the system.  Some will leave before year end, some first quarter; the rest will die off once the new models crushes them with its ever changing focus/grids/leadership...

mnymker's picture
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Burn citi Burn.

excitr1011's picture
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aurence wrote: You guys are missing the point; the problem with this new plan is the very essence of being a broker; the firm completely owns the clients, hence they are forcing brokers to join teams and are combining all the brokers accounts. Then the payout will decrease like initially stated by a 30% target and will all become salaried employees. And the greatest problem is that at the moment only a name change occurred from Smith barney to CPWM, they are all still brokers not Charles Swab 1800 customer service representatives. Going all managed money should be left up to the brokers and the clients and not the institution.

I think what CITI is doing is pure communism and it failed in the real world, and in CPWM it will also fail. I also think MSSB is not considering other options when it comes to hiring CPWM brokers because I think 80% of brokers will leave CITI under these conditions. MSSB is missing a great opportunity. I think MSSB should buy the assets and the brokers from CPWM because they have a 100% success rate to keep the clients, some clients still receive their statements with the Smith barney name on or access their account through www.smithbarney.com.

Shameful all that is happening. I agree 110 percent, but no one is doing sht about it!!! Were are the fa's getting together to discuss this collectively? They're not, everyones looking out for their own ars... Why can't we go to mssb? Is anyone taking the lead?

excitr1011's picture
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Joined: 2006-10-19

If I was doing 2mm gross a year I would, but am nit having dinner with Debbie and Terry and chatting up... These team leaders are not lookng out for the advisor...

MrBig's picture
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The team leaders are advisors and they aren't "chatting it up" either. If you're not a team lead, it's likely because you sold too many annuities and thought about yourself more than your clients.

You're lucky to at least part of a team because people think you have potential to change and at least did some fee business, and are not 5th quintile. Sh!t, you're being given the opportunity to change your business from transactional to fee-based without having a worse year than this year. Take the offer and do it, or just leave and keep peddling annuities.

Might Citi have other motives? Perhaps, but I hope not. If they do, well, then once you put in the work to convert your business and have a well formed team, it would certainly be against Citi's best interest to not make your team happy. Why? You could leave as a team and do significantly more damage than under the current structure of one advisor leaving, and more client will leave with a team than individually.

Again, if it doesn’t work for you, then quit whining and leave. More clients will leave with you now then will when you leave alone (without the team) later.

Gaddock's picture
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Joined: 2007-02-23

I think Bank Brokers will have a much harder time getting on with a wire than they think. I hope for your sake I'm wrong. Taking the easy way out in the beginning will now be the jaws that bite. No more "like shooting ducks in a barrel" and telling people that are cold calling that they are foolish.
 
Going to be a tough ride.

burtonfinancial1's picture
Joined: 2008-09-30

So Citi hires Bodurtha from BAI as announced today by the AP.  Interesting.. there are NO BAI FAs anymore, they're all Merrill Lynch advisors today.  What's Steve's mandate?  Article here:

NEW
YORK (AP) -- Citigroup Inc. said Thursday it named a former Merrill
Lynch executive, Steve Bodurtha, as managing director and head of
investments for North America.
Bodurtha will be responsible for managing the investments platform for Citi Private Bank across the U.S. and Canada.Bodurtha
was most recently head of institutional retirement, philanthropy and
investments for Bank of America Merrill Lynch. Before that he was head
of investment products for Merrill Lynch Wealth Management.Charlotte, N.C.-based Bank of America Corp. acquired Merrill Lynch in January.

What Me Worry's picture
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Joined: 2009-11-19

Everyone stay calm..it doesn't matter if you clients lose all of their money, the mkt averages 10 % over the past 100 years.

shantom1's picture
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MrBig wrote:The team leaders are advisors and they aren't "chatting it up" either. If you're not a team lead, it's likely because you sold too many annuities and thought about yourself more than your clients.
You're lucky to at least part of a team because people think you have potential to change and at least did some fee business, and are not 5th quintile. Sh!t, you're being given the opportunity to change your business from transactional to fee-based without having a worse year than this year. Take the offer and do it, or just leave and keep peddling annuities. Might Citi have other motives? Perhaps, but I hope not. If they do, well, then once you put in the work to convert your business and have a well formed team, it would certainly be against Citi's best interest to not make your team happy. Why? You could leave as a team and do significantly more damage than under the current structure of one advisor leaving, and more client will leave with a team than individually. Again, if it doesn’t work for you, then quit whining and leave. More clients will leave with you now then will when you leave alone (without the team) later.
 
Your first comment is bs, I know plenty of very good advisors who did not get the nod b/c management were only looking for one or two in an area.  A producer doing $500m a year may be a peon in your astonishing world, but in reality they are good producers managing their books well.
 
5th quintile reps are already gone...
 
Most reps are no longer annuity peddlers, there are some exceptions just like there are still reps at wires who still just trade stocks all day long.  But most have evolved their businesses into a part fee part commission based model. 
 
Are there more surprises?  YES!!  As a former C employee I will tell you they will continuously change things, never for the better, as they try to aggressively move to a salary model (for all team members)....

MrBig's picture
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And the sky is falling, everybody take cover...

I didn't say anything about anyone doing $500m in production being a peon, and someone doing 60% annuities, 30% misc, and 10% managed is not an "evolved" business model. That is simply what someone else referred to as shooting fish in a bucket or whatever that phrase is. You're just selling a product, not advice, and not your own expertise.

If someone has 30% this year, 20% last year, 10% the year prior, well, maybe. But, if the guy down the road from that person is at 60% fee-based and this one at 30%, who do you think they want as the team lead?

excitr1011's picture
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How many advisors leave tmrw???? Anyone have a good over/under number??

Also I heard that they'll be one rep code for the team, but everyone will still have their individual rep code, but all the revenue will funnell into the team code.. Anyone here about this????

shantom1's picture
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MrBig wrote:And the sky is falling, everybody take cover... I didn't say anything about anyone doing $500m in production being a peon, and someone doing 60% annuities, 30% misc, and 10% managed is not an "evolved" business model. That is simply what someone else referred to as shooting fish in a bucket or whatever that phrase is. You're just selling a product, not advice, and not your own expertise. If someone has 30% this year, 20% last year, 10% the year prior, well, maybe. But, if the guy down the road from that person is at 60% fee-based and this one at 30%, who do you think they want as the team lead?

 
Who still does 60% in annuities?  There are some, yes I agree, but I refer to the average guy.  Like I said there are plenty of reps at Merrill who still peddle stocks, but you don't consider that the norm.  6 years ago I would totally agree with you, but that was 6 years ago.  I'm just trying to be fair.  Now if we were talking about Roslyn savings, then NO, 60% is way to low, try closer to 85%...
 
They are capped at 2.5%, most of the reps I know there do 10-25% of their business in annuities; and b/c of the higher intitial revenue payment from annuities this would mean that dollar wise they are investing far more assets into managed money, fixed income etc...

MrBig's picture
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excitr1011: I would not be surprised if a lot leave today. And yes, I heard that clients remain under your rep code, but revenue goes into the team rep code (but can be individually tracked).

shantom1: Yes, I'm obviously being extreme, but I have seen plenty of those. The firm used the guideline of 40% of the FA's assets in VAs as being extreme (I'm going from memory, but pretty sure that was the number) and anyone over that needed a justification for being let on a team as to why we thought they would be a good match. They also needed justification if they had under a certain amount of fee-based business (I think $5MM, but not the number on the Focus report, the true fee-based assets).

burtonfinancial1's picture
Joined: 2008-09-30

Some leave today. next Wed.. pre-Thanksgiving is likely to be bigger day. 4 day holidays are historically huge move dates and this one lines up perfectly for those who got to work 4-6 weeks ago on their options.    Biggest move date will be 12/17 or 12/18 just before FINRA goes dark for the holidays. 

shantom1's picture
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Here ya.  All being said I formally used the comment "they threw a grenade into the platform".  I have since changed it to "it is now a massive radioactive wasteland".
 
Anyone who is not preparing to leave regardless of the situation will be doomed to suffer the consequences.  Your only hope and prayer should never be "in the end Citigroup will do right by me"- that's the most contradictory statement maybe in history.  It's like a stock you know is going bk but you hang in there hoping an angel makes a huge offer and saves the day.  This isn't the lottery...
 
 
For those who still are not sure what they want to do I will offer one piece of advice.  This can be modified and used in many aspects in life- Ask yourself "would you today apply and take a job at the company"  If you do not answer a resounding yes (if you do- seek therapy), move on.
 
This works amazingly well when trying to do the hardest thing in investing- timing when you should leave a stock (winning or losing) "would I buy the stock today at these prices"...

burtonfinancial1's picture
Joined: 2008-09-30

Here's something I've heard but wondering if anyone can verify.... Citi may EXIT the protocol and file very soon to do so.  IF this happens, the ramifications within the new team structure would be even more devastating.  I understand it takes 30 days from the time the firm files to the date they are out of the protocol agreement.   This would be the ultimate nail in the coffin to anyone stuck at the firm after the FINRA cut off date 12/18 if Citi were to file on or by 12/1 right? Anyone hearing this???

shantom1's picture
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First I am hearing it.  It makes sense for a company winding down their business since only people who are hiring will want to participate...
 
WRITING IS ON THE WALL

MrBig's picture
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I've spent a lot of time on the thoughts of protocol and here's the thing... If they were going to leave protocol, they'd have been STUPID to not do it BEFORE announcing the changes. But, giving Citi the benefit of the doubt (because they really are stupid), let's just say that they didn't think about protocol until we directly asked them about it and that they now plan on exiting protocol.

Protocol only started in 2004. Did advisors never leave before this? No, and non-protocol only stops you from actively prospecting. Doesn't mean you can't call and let your clients know where you are...

Might be more difficult, but it's not going to stop a client who is likely to go with you from going, and a cease and desist is usually not the longest time-frame.

Also, with all the people that have already left, Citi needs to be able to recruit and non-protocol does not fit the model.

Oh, and it's not 30 days, it's only 10 days to exit protocol.

MrBig's picture
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Also, Burton, I've only heard this as a rumor from the outside. The inside (even though they may be liars) has said no, and they seem honest about it. (Again, they may be lying and I may be an idiot for staying, but I know my business and my clients and am confident that I can make it work either way).

burtonfinancial1's picture
Joined: 2008-09-30

10 days.. got it. I've heard it only from people inside but it could just be one of the many half truths and rumors that make this board as interesting as it is at times.   IF Citi springs this on the troops, sounds like it would be a pretty big reversal. 

boomersanremo's picture
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Joined: 2009-11-20

now big rumors of Citi withdrawling from Protocol. This will difinatly restrict any of my clients ability to move with me.

MrBig's picture
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It's scary to think about and I almost split just thinking about it. It's not so much that I want to go, but the thought that I'm trapped and I have no choices. I don't like that feeling. But I thought about it more and realized what I posted last about it and don't feel that way anymore. I'm confident that no matter which way this goes, I can always leave and my good clients will always follow.

About your comment of "springing" it. I don't believe that they have to inform us that it's coming, just that it's done. And with 10 days anyway, letting us know wouldn't help too much.

excitr1011's picture
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anyone hear of any departures?...

LogansRun's picture
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If there is even a remote chance a firm would exit protocol, just given their pure attitude towards their reps who are the glue between the firm and clients of their lousy organization, why in the world would you even consider staying?

Moving is really hard - but not impossible. I don't judge, but unlike some recruiter or branch manager, I can empathize and see how a broker feels like "I'll wait until..." I know because I said the same thing. Feel bad for any FA stuck at these sinking old ships. Best thing to do - set a course, have a plan and organize, and do it. If you over think it, you'll sit around while they (management) continue to tighten the locks. Like a frog in a frying pan! You don't even realize the heat until it's all over.

Everyone of these big Tarp sucking firms works to undermine the FA / Client relationship - and that's just the way it is. The size and mid/upper mgmt. has just clouded what the business is about. They justify and rationalize their salaries and existence while squeezing the FAs and clients for lower payouts, higher admin/account fees. Watch 'em do everything they can to block the exit door more and more each business day. Not about making things better for clients or improving FA support because they screwed up. It's crytal clear guys and my sympathy if you can't see this. These forums are like looking back at a reflection of how I felt and how I was scared prior to leaving. Watch the Shawshank Redemption movie and that's how it feels to bust out.

Have a plan and get outta there. Life goes on.

burtonfinancial1's picture
Joined: 2008-09-30

NEWS... 2 defections confirmed this afternoon.I have confirmed what I heard via FINRA.org  I hear a lot of offers are in the works or already out there with most of them good through 12/15. Movement will accelerate as larger Citi FAs realize now is the only time to move for those who will and can. FAs who hang around for months and into 2009 will find their 'teammates" making any chance to transition virtually impossible. Hiring authorities know this as well. The premiums in terms of transition packages will dive 2010 forward and Citi FAs will be very hard pressed to move clients once teamed and motion into RIA platform begins. 

excitr1011's picture
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wheres the exodus? I, just like everyone else at citi would love to hear about more defections, but where is the mass exodus people predicted for Wednsday and today?Any more departures today? heres hoping for more..

Paperboy's picture
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Joined: 2009-10-31

Couple of departures I hear. Not the huge exodus expected.

boomersanremo's picture
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DOES ANYONE KNOW how the focus report, going forward, will look like? will an FA on a team be able to show his or her individual AUM & production? or will all fall under Team Leader? If so, how would one show their numbers if they decide to move down the road?? If you can't show production and assets, no firm is going to hire...right??

MrBig's picture
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We'll be on a new platform at some point, so there will be no Focus report, as that is a Smith Barney report. Assets will still be under your own number. Revenue will go to a team number, so no idea how that will reflect on any report. They say it will be "tracked individually" but who knows what that means and if we can generate a report for it. I'm sure the new platform will have a similar report, but who knows what it will look like individually. Yes, I'm worried about this as well.

So, shorter answer: Assets=Yes / Revenue=who knows, but likely not (I don't think the higher-ups know this yet).

burtonfinancial1's picture
Joined: 2008-09-30

2 major issues facing Citi FAs who move boldly into 2010 in the new Citi world. 1) Teams.... once part of a 'team', especially a forced teaming situation, life will simply not be remotely close to the way most FAs have become used to.  Most bank FAs have not been part of teams before and the wirehouse style teams that are so common now are very different than what Citi will have.  Just ask a wirehouse broker who was part of a team who then left the team to go to another firm how that went over.  I've known many who split up but stay at the same firm... in that case, life goes on, so what.   Those who split out of team, leave to another firm and 'try' to take 'their' clients are often lame ducks for a good few years. I've seen this literally screw up years of work. The intel and relationships with clients across the team really hurt their ability to move effectively. Managers know this when recruiting someone in this situation and it changes the game for sure. 2) Production reporting- once part of a team, breaking out and proving what is 'yours' and what 'comes with' etc becomes very cloudy. Sure, it wont' matter to a broker leaving in February so much. Hang around well into 2010 and ugly will be the scenario for the fool who realizes Citi is not for them at that point. Ever gotten in front of a hiring authority with team reports and vague if not impossible to understand individual reporting trying to prove what's yours and what comes with you if you move?  Managers see this all the time and again, it kills transition deals.  You'll feel like the Kmart blue light special when the 'deal' is put in front of you.  At Citi, your clients are 'yours' today, but that'll change very quickly.  I commend anyone at C who has the stones to stay on for the long haul. You'll need them.

excitr1011's picture
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I don't see a reason for panic... I also know that managers and recruiters may want to take advantage of the situation, ... Crappy situation for sure, leave if you must, but if your a good rep, I think you'll get a gig , now or in a couple months...

shantom1's picture
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Joined: 2009-10-28

Not for nothing, but take the blinders off- you don't want to be left when the party is over (and they just stopped the music).
 
There can be nothing good to happen for those who stay and the longer you wait the more competition you will have for deals when the time comes.
 
I feel bad for those still there, there is some remnant brainwashing effects in place.  I worked there for years and when I left and looked back I could not believe how evil an empire the place really is.  My assets under management have gone up 3 fold since I left mainly because I am in a place where there is no anti-business development arm calling all the shots...

burtonfinancial1's picture
Joined: 2008-09-30

Update....Big producer in Chicago area left Friday last week to LPL.. confirmed! One of the higher producers in the mid west I hear. 

burtonfinancial1's picture
Joined: 2008-09-30

Second update... just got a pm confirming 2 FAs in CA out the door today. Merrill and Wells Fargo seem to be the winners there today.

shantom1's picture
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Joined: 2009-10-28

Next weekend there will be another few...

boomersanremo's picture
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Joined: 2009-11-20

just spoke to a couple buddies who are out this week. stay tuned

EASY/E's picture
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Joined: 2009-01-13

Anyone else leaving.  People I am close to are taking it day by day. No one will integrate the way that they are dreaming of.  We will be teamates for compensation but are not going to introduce our clients to each other or evan let our clients know that we are part of a team.  The way we see it is that until we make a more permanent decision the team will do business as usual and we will attempt to be as fair as posible so that whatever a person puts in they will take out.  The team is a facade. 

shantom1's picture
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Joined: 2009-10-28

The program is a facade, They are doing everything in their power to bury the FA's.  The longer you stay the more you loose- it's like all citi reps are standing in quicksand and some are reaching for ropes while others are hoping the sand stops sinking... 

burtonfinancial1's picture
Joined: 2008-09-30

Watch for some moves today on the coasts for the most part... it will happen.

shantom1's picture
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Joined: 2009-10-28

3 in NY I know of today...

TOP BROKER's picture
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Joined: 2006-06-18

10 left this week in the LA area

NOVA's picture
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Joined: 2005-01-11

I just heard one came back from getting a sex change operation.

shantom1's picture
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Joined: 2009-10-28

Exodus is here. Can someone leave this coming Friday the 18th? I've heard FINRA shuts down for the holiday but I'm not sure if they are open Fri or till what time...

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