Citi’s introduction of robo advisor Wealth Builder marks the latest major bank to launch an automated digital wealth management platform for its customers. With an advisory fee of 55 basis points and an investment minimum of $1,500 for certain customers, it’s not the most retail-friendly option on the market, but it’s the latest example of the push banks are making to keep customers engaged with their businesses.
Wealth Builder is “part of Citi’s holistic approach to banking and wealth management,” said John Cummings, head of the bank’s U.S. consumer wealth management division. He described a minutes-long account-opening process that would help retail clients meet their investing goals.
Behind the scenes, the tool’s technology is powered by Invesco’s Jemstep. The advisor-focused digital advice provider is responsible for the entire client experience, from goal creation and client profiling to onboarding and model mapping, said Simon Roy, Jemstep president and CEO. BNY Mellon's Pershing unit custodies Wealth Builder client assets. Citi handles account funding, as well as mapping client responses from a risk questionnaire to six model portfolios holding and trading Invesco ETFs.
When asked to delineate both the development process of the new application and the demarcation between Citi and its partners, Roy said that the bank had selected Invesco’s asset models through a separate process from the initial development of the application and only after the bank had selected Jemstep as the “rails” for Wealth Builder.
The risk questionnaires used by Citi included input from Jemstep but were ultimately approved by the bank, according to Drew Benson, a spokesperson for Citi.
Jemstep is no stranger to providing wealth management services to banks. Last year, the digital advice provider signed a deal with Infinex Financial Group to provide goals-based advisor support across more than 220 community-based banks and credit unions. Jemstep provided its Advisor Pro service through Infinex’s broker/dealer platform.
While Citi is late to the robo advisor world and will have to compete with earlier-moving banks, like Goldman Sachs, and digital investment pioneers, like Betterment and Wealthfront, it’s not too late for one more digital wealth management offering, said David Goldstone, head of research for Backend Benchmarking—as long as Citi bankers are good at cross-selling.
“Most digital advice clients at incumbent institutions are existing customers at those institutions,” he explained. “Success will hinge on their ability to cross sell existing customers, not from their ability to compete with other robo-advice providers. Citi has a large pool of customers that can be tapped for digital advice.”
Products like Wealth Builder are making up for banks’ service gaps, he added, which used to require clients to hit investment minimums often in the hundreds of thousands of dollars.
“Low-cost robo-advice is now table stakes for major financial firms,” he said. “Firms [that] do not introduce wealth management early may run into client pipeline issue[s] as many investors will have an existing relationship in place by the time they are wealthy enough to be attractive to a traditional advisor.”
Citi will waive advisory fees for Citi Priority and Citigold clients, but still charge underlying ETF management fees ranging from 18 to 24 basis points. The firm’s marketing of Wealth Builder began with a launch announcement last Thursday. It plans to promote the service more publicly in the coming months.
