October 20, 2020

Citi nabs Merrill Lynch exec as it ramps up wealth management business

  • Citigroup is creating a new top wealth management role in its US Consumer Bank and hiring Bank of America wealth executive David Poole for the job, Citi said on Tuesday. 
  • The newly formed role and choice to fill it with Poole is a sign Citi is looking to beef up its US wealth management services for Main Street clients.
  • Analysts and other experts pointed to Poole’s digital prowess — he has overseen Merrill Lynch’s online brokerage and its self-directed and hybrid investing options.
  • The bank is going after a coveted demographic, and one that rivals like JPMorgan and Goldman Sachs are going after with growing wealth services, too: the so-called mass-affluent client set. 
  • Visit Business Insider’s homepage for more stories.

Citigroup is doubling down on plans to beef up its US wealth management services, creating a new top wealth role in its US Consumer Bank and hiring a Bank of America wealth executive for the job.

The bank said Tuesday it was hiring David Poole, who previously oversaw Merrill Lynch Wealth Management’s online brokerage and its self-directed and hybrid investing service, as head of wealth management for the US Consumer Bank starting November 1. 

Poole, who was with Bank of America for seven years, will report to David Chuback, the head of US retail banking.

The new role and choice to fill it with Poole, known for his digital wealth prowess, is a sign Citi is looking to beef up its US wealth management services for the important mass affluent client segment, or those that not wealthy enough for its private bank white-glove service, but who have enough money to open up investment accounts.

Citi has been a laggard in US-focused wealth management offerings, said Ken Leon, a bank analyst and director of equity research with CFRA Research. One of its core strengths as a bank lie in catering to US consumers, but it’s a “newbie in wealth” when it comes to serving affluent US households, he said in a phone interview. 

Read more: Citi’s CFO says the bank is shrinking its office footprint and moving people to lower-cost locations to help keep expenses in check

Citi is known for its private bank catering to the world’s elite, especially in Asia, Leon noted. But wealth in the US hasn’t been a “core” business since Morgan Stanley took over Smith Barney from Citi after the great financial crisis. 

The New York-based bank is going after a coveted demographic, and one that rivals like JPMorgan and Goldman Sachs are increasingly going after with growing wealth services, too: the so-called mass-affluent client set, loosely defined in the industry as a household with less than $1 million in investments assets, but with at least somewhere in the neighborhood of $100,000. 

Read more: The real reasons behind Citigroup CEO Mike Corbat’s retirement

Citi is planning to accelerate financial adviser hiring and expand its Citigold Private Client segment, Chubak said in a statement to Business Insider. A spokesperson declined to comment on the size of Citi’s adviser force or how many advisers they’re looking to hire.

In June, the firm combined its wealth teams across the US Consumer Bank — Citi Personal Wealth Management and the International Personal Bank in the US — and created Poole’s position to run the combined team, which also includes a newly consolidated team of Citi wealth advisers. 

In public filings, Citi does not break out assets under management for its wealth businesses with the same level of detail of larger wealth managers. Its North American consumer bank oversaw $69 billion in investment assets under management as of the second quarter. 

Poole’s appointment is the latest personnel change to the consumer bank. Last week, Citi abruptly said it would name a new global consumer banking boss in the coming weeks after it named Jane Fraser, the current chief, as the next Citi CEO to replace Michael Corbat early next year. 

A Bank of America spokesperson said other business leaders at the firm have assumed Poole’s responsibilities, though declined to specify which leaders. 

Poole’s appointment is a sign Citi is serious on ambitions to scale its wealth management offerings

Citi executives have signaled that wealth management is a key part of growing its reach to retail customers.

The firm has set out to get to that demographic and stay competitive with new products like a new robo-adviser it introduced in January powered by Invesco-owned Jemstep. The service, called Citi Wealth Builder, requires a minimum investment of $1,500 and a fee of 0.55% of assets for clients who are not already using one of its premium offerings like Citigold. 

It built out a separate digital financial planning tool for Citigold clients in March 2019, called Citi Wealth Advisor, which also gives them access to a dedicated team of advisers, and announced that clients would get commission-free trading on ETFs and new-issue US Treasury purchases.

It is clear Citi wants to do more with its tech-focused wealth offerings. Jeff Feldman, a wealth management-focused recruiter and consultant who founded Chicago-based Financial Recruitment Partners, said it came across that Citi tapped Poole for his experience and expertise in digital wealth management. 

“Citi has been building out their client digital experience, and this is further indication of moving more towards providing ‘guided advice’ for the mass-affluent client,” Feldman told Business Insider. 

Speaking broadly, a traditional financial adviser-client relationship — as opposed to a private banker overseeing a client — can be more profitable for a firm because of the house’s ability to control expenses, specifically advisers’ total compensation, Feldman said. 

Read more: Wealth managers could save millions in costs from a snappier recruitment process. An analyst lays out the 3 firms that could benefit most.

Citi Private Bank’s US operations will not fall under Poole’s remit, since that business falls under the Institutional Client Group, along with other units like investment banking. 

Citi’s eye to risk management and recurring revenue

Because of Poole’s background at Bank of America with its Merrill Edge products, and before that with digital brokerage and financial services firm E-Trade for 14 years, his appointment shows Citi is serious about improving its digital capabilities, said Andrew Schwartz, a New York-based analyst with management consultant Oliver Wyman’s financial services division Celent. 

mark mason citi

Mark Mason, Citi’s finance chief.


Shannon Stapleton/Reuters



The US wealth management market is also relatively untapped by Citi, which is a household name, but has not competed in the same sense with the largest wealth managers like Morgan Stanley and UBS, Schwartz said.

Citi has looked to beef up its Citigold wealth offering in recent years, which requires a minimum investment of $200,000. The firm does not disclose total assets under Citigold. 

In unrelated comments on Monday at an industry conference, Citi Chief Financial Officer Mark Mason said the firm is accelerating infrastructure- and control functions-related investments following a high-profile $900 million loan facility blunder.

The bank is planning more than $1 billion in incremental investments for this year, he said. When Poole was with Bank of America, he was responsible for “helping to pursue a culture of strong risk management” through oversight of business supervision and controls, according to the bank’s website.

Mason also noted a strategic, firm-wide focus on generating reliable, recurring revenues to offset pressure on businesses that are highly exposed to low-interest rates, like the Treasury and Trade Solutions business. He pointed to wealth management, specifically, as an area where the firm can grow. 

Read more: Citigroup is stepping up its war with the hedge funds that refuse to return Revlon money by ignoring their Bloomberg chats and cutting off pricing information on bonds

Other experts Business Insider spoke with noted the bank is trying to do more with its mass-affluent-focused wealth management offerings with larger competitors have pulled ahead. 

“They’ve got great bankers … they just need more advisers,” Rick Rummage, the founder and chief executive of the Rummage Group, a national wealth management-focused consultancy and recruitment firm based in the Washington, DC area.

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