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Citi PWM Exodus

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Nov 17, 2009 2:56 pm

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. 

Nov 17, 2009 3:12 pm

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.

Nov 17, 2009 4:37 pm

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.

Nov 17, 2009 5:29 pm

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. 

Nov 17, 2009 5:49 pm

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.

Nov 18, 2009 1:27 pm

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.

Nov 18, 2009 2:42 pm

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

Nov 18, 2009 3:09 pm

[quote=aurence]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.[/quote]


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.

Nov 18, 2009 3:48 pm

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…

Nov 18, 2009 4:41 pm

Burn citi Burn.

Nov 18, 2009 5:46 pm

[quote=aurence] 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.[/quote] 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?

Nov 18, 2009 5:48 pm

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…

Nov 18, 2009 7:51 pm

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.

Nov 18, 2009 10:46 pm

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.
Nov 19, 2009 7:05 pm

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.

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Nov 19, 2009 7:19 pm


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

Nov 19, 2009 7:31 pm

[quote=MrBig]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.
[/quote]   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)....
Nov 19, 2009 7:59 pm

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?

Nov 20, 2009 12:51 am

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???

Nov 20, 2009 2:52 pm
MrBig:

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...