By Rebecca Ungarino
Citigroup's head of wealth management has set out a lofty goal for the challenged business he has inherited: leading the industry.
"You can't take the seat that I'm in without, in my view, setting a very high bar in terms of over time what success should look like," Andy Sieg, the veteran wealth executive who joined Citi last year, said Wednesday at a financial industry conference. "This should be the No. 1 wealth management business in the world over time."
"I say that because the global nature of wealth creation plays to Citi's global reach around the world," he said. "That's our long-term strategy."
Sieg's plans to improve the business include boosting financial advisors' productivity, installing new leaders, enhancing clients' experience when they work with Citi, and reining in expenses.
Citi hired Sieg last year from Bank of America's Merrill Lynch Wealth Management -- where he ran the business for six years -- to improve Citi Wealth's position. Sieg joined Merrill in 1992 and left in 2005 for Citi, where he worked until returning to Merrill in 2009. Now that Sieg is back at Chief Executive Jane Fraser's Citi, he has a difficult job ahead of him.
Results from an audit that Citi conducted with consulting firm EY this year showed the wealth arm is lagging behind competitors in core parts of the business, Barron's reported Tuesday .
"The litmus test around a wealth franchise is: Are you generating net flows? Are your clients bringing in more assets than they're taking away? Are you an asset gatherer?" Sieg said Wednesday, adding that the business has been shrinking as the market has expanded. "We very quickly set net new investment assets as the guiding star of what our leadership team is focused on."
Even though Citi is the fourth-largest U.S. lender and has a presence internationally, it has lagged behind competitors in managing affluent clients' money. Citi's wealth business -- which includes the private bank, Citigold, and a unit that caters to high earners and their employers -- has $515 billion of assets as of March, which includes trust and custody assets, up 12% from a year prior.
In comparison, Bank of America's global wealth and investment management arm oversees $4 trillion of client balances, up 13% in a year.
Citi's update Wednesday was important because wealth has been an underperformer and Sieg is in "the early innings of a turnaround," Piper Sandler analysts led by Scott Siefers wrote in a note to clients.
Fraser, who has been carrying out a sweeping overhaul of Citi since becoming chief executive in 2021, envisions wealth "becoming a much more significant part of what the Citi brand means again around the world," Sieg said. Citi shares have fallen 11% in the past five years, while the S&P 500 and the widely tracked Financial Select Sector SPDR Fund have soared 88% and 49% in that time, respectively.
Citi has exited the consumer banking business in more than a dozen markets outside the U.S., including India and Australia, with plans to instead double down on wealth operations. Citi said this week that it completed the sale of its consumer wealth portfolio in China to HSBC, including transferring more than 300 employees as part of the sale.
Sieg is working to bring in new blood as well. Citi said Wednesday that it hired Keith Glenfield from Merrill, where he and Sieg worked closely together, to lead Citi's investment solutions.
"There's tremendous talent in this business, but we're also very candid and we're trying to take a very objective view about what caliber of talent is going to be required to reach the aspirations that I just talked about," Sieg said. He called Citi executive Kris Bitterly, who is now shifting to run Citi's Wealth at Work, "one of our most high-potential leaders."
A significant number of leaders have also left the wealth unit. At least 21 executives have left since Sieg started last year, a Business Insider analysis showed.
When Betsy Graseck, the Morgan Stanley analyst who interviewed Sieg during the conference, asked whether he had seen "any regretted departures," Sieg said: "There's been very few."
Write to Rebecca Ungarino at rebecca.ungarino@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 13, 2024 15:57 ET (19:57 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments