Citi's path to its wealth management ambitions lies not so much in bringing in new clients as in deepening relationships with existing ones.
That's what Citi Head of Wealth Andy Sieg said at the BofA Securities Financial Services Conference in Miami Beach, Florida, on Wednesday. Sieg said Citi's private bank — which serves wealthy clients — is already working with about a quarter of the billionaires in the world.
They and other clients have entrusted Citi with about $1 trillion to manage. But they also have roughly $5 trillion held either at rival institutions or off to the side for other purposes.
That $5 trillion is where Sieg and others are looking as they seek to boost the firm's haul of net new assets — which he called "our northstar." Citi reported in January that its total for net new investment assets rose by 40% year over year in 2024 to $42 billion — a figure that includes assets under management, as well as trust and custody assets.
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"When you think about major U.S. wealth management firms, a lot of the growth is driven by new client acquisition, not surprisingly, because advisors tend to have a very large share of wallet with their core clientele," Sieg said. "This business has a different starting point. We've got tremendous reach around the world. Clients, as I said, have been with Citi for decades. But in aggregate, we have a very low share of wallets."
Citi's overseas reach
Sieg said Citi's presence not only in the Americas but also Europe, Asia and Africa puts the firm in a place to serve wealthy clients with equally far-reaching needs.
"If I'm a billionaire in Hong Kong and I have kids going to school in the U.S., and I'm spending more time in the U.S., and I'm thinking about buying businesses in Europe — there's no other bank in the world that is positioned to have that kind of conversation holistically in the way that Citi can deliver," Sieg said.
Sieg said Citi has a presence in 80 countries. Many of its overseas clients are entrepreneurs who first approach it for loans and expertise needed to take their businesses across international lines
"The time that they are beginning to bank with Citi is a moment when these companies have really begun to leave their home country, operate globally, wealth creation is taking place," Sieg said.
Lagging technology
Sieg, who came to Citi in September 2023 from Merrill, acknowledged Citi's internal technology still lags behind many of its rivals', at least in some ways. Sieg called Citi's system for accessing capital markets "best in class" and said its system for accessing alternative investments is "arguably" in the same category. But its various services haven't been connected in a way that allows advisors and clients to move smoothly from one to the next.
"They tend to be more single-product consumers of what Citi has to offer," Sieg said. "And it's extremely difficult for advisors and service personnel to navigate many of our platforms."
He said Citi is working with tech firms like Palantir, Google (Alphabet) and Snowflake to improve its internal systems. The good news, he said, is that Citi has vast amounts of proprietary data it can draw on to make needed adjustments. And artificial intelligence has proved useful in speeding the work. Sieg predicted Citi will be showing technological "progress, we think, in months, which in my career, would have been years of progress to move the platforms forward."
Cutting staff and boosting profitability
Citi had previously set itself a goal of bringing its return on tangible common equity — or ROTCE, a measure of profitability — to a range of 15% to 20% by the end of 2026. In its latest earnings report last month, it adjusted that down to 10% to 11%. Saying the lowered numbers weren't a sign of trimmed ambitions, CEO Jane Fraser called the new ROTCE goals for 2026 a "waypoint, not a destination."
Sieg expressed confidence Wednesday that Citi would eventually hit its profitability benchmarks. A slide he showed during his remarks showed that quarterly costs in the firm's wealth division had fallen by about 3% year over year to $1.57 billion by the fourth quarter of 2024.
That was partly driven by staff reductions that had brought the wealth unit's total employee headcount down by 1,800 to 12,300 by the end of the year. The division has also eliminated what Sieg calls "hobbies" — or pursuits not directly aligned with the goal of improving the bottom line.
Sieg said Wednesday that he doesn't think Citi can now reach its profit goals simply by continuing to reduce costs. Instead, it needs to concentrate on bringing in new assets, primarily from existing clients.
He said Citi sees a big opportunity in helping investors move more money into private markets. S&P Global has predicted the amount of money invested worldwide in alternatives like private equity, private credit and private real estate will hit $15 trillion this year, up from nearly $12 trillion at the end of 2023.
Sieg said Citi's chief investment office is recommending investors put anywhere from 15% to 30% of their portfolios into alternatives. Many Citi clients are nowhere near that, he said.
"That's an area where a 4 to 5x increase in allocation, even today, is very easy to imagine, and a place where Citi's historic strength really shines," he said. "We have had some of the more innovative alternatives offerings over the last 10 years, but they have not been scaled."
Overhaul of leadership ranks
Citi has been undergoing a massive overhaul in recent years in a bid to improve its bottom line. It has rebuilt itself along five lines of business: trading, banking, services, wealth management and U.S. consumer offerings.
It has also sold or wound down its consumer banking franchises in many countries. Sieg said that structural paring can draw attention away from the strong presence Citi maintains in centers of wealth.
In the U.S., for instance, the bank only has about 600 branches, Sieg said. But they are in six markets — New York, Miami, San Francisco, Chicago, Washington, D.C., and Los Angeles — containing roughly 40% of the business tied to ultrahigh net worth clients, he said.
Citi already has banking relationships with many of these people, Sieg said. The next step is to turn them into wealth management customers, he said.
"When you have a $100 million loan out to a client, they are very happy to spend time with you month to month," Sieg said. "So in some ways, this is as straightforward as bringing the power of our investment platform, the insights of our Chief Investment Office, to the table and causing people to see we can help them much more broadly than we have been historically."
Citi's wealth division has been undergoing its own internal overhaul, primarily within its leadership ranks. Ida Liu, the head of its private bank, announced last month that she was leaving, and her position was later eliminated. Among its new hires from other firms, Citi has brought on Kate Moore from BlackRock to be its chief investment officer, Dawn Nordberg from Morgan Stanley to build stronger ties between its banking and wealth divisions, Keith Glenfield from Merrill to be its head of investment solutions and Marc Turansky from JPMorgan as its head of investment advisory.
Sieg said Wednesday that he's managing the wealth division in the "old-fashioned way."
"Every week I'm leading a meeting, which is generally 90 minutes, with my direct reports, and about half the time, their direct reports as well," he said. "And we're going business by business, segment by segment, market by market, and talking about whether net new investment assets are coming in."
