How Citizens plans to take on the wealth industry after its hiring coup from First Republic

Citizens Financial Group, one of the largest banks in the U.S., hasn't traditionally been on the short list when top advisors consider moves. 

But that could change in the next few years, as the Providence, Rhode Island-based bank builds out its rapidly growing wealth management business and seeks to plug in holes where the industry has fallen behind, specifically in cultivating talent for early-career advisors and veterans alike. 

"They're not big enough to get anybody's attention. But they have the resources to become an attention-getter," Beverly Hills-based industry recruiter Philip Waxelbaum of Masada Consulting said in an interview, of Citizens' standing in the wealth management industry. 

With the recent hire of around 50 private bankers and support staff from the former First Republic — now owned by JPMorgan Chase — Citizens is signaling its plans to get more attention. The bank, with around $222 billion in assets and $172 billion of deposits as of the end of March, became a bidder for First Republic in the fallout of the spring banking crisis. 

While it lost that bid, this new recruiting coup effectively gives the bank a piece of the First Republic pie. It also grows the Citizens footprint in several key coastal markets for serving the wealthy: the bankers came from Boston, Florida, New York and San Francisco, according to a press release. 

"This demonstrates to the industry that Citizens is doing something special and that Citizens is a great home," Chris Weyrauch, the head of wealth management at Citizens, said of the news in an interview. 

Weyrauch said the First Republic bankers were not actively recruited by Citizens. "They came to us," he said, adding that "We were obviously competing against a lot of financial services when they started to shop and look for that new home." 

The new additions were from the private bank at First Republic, where they had been a major referral source for clients to the wealth management business, Weyrauch said. 

The similar culture of a regional bank had appealed to the group. 

"We are a large player and we have a strong balance sheet. But at the same time, we're not too big to care about clients and to allow them to deliver that high touch client service model that they're so accustomed to," Weyrauch said. 

Read more: Citizens hires 50 ex-First Republic private bankers

Bulking up across segments 
The bank's deeper forays into wealth management began around five years ago when it announced plans in 2018 to buy New York-based Clarfeld Financial Advisors, an ultrahigh net worth practice — a deal which closed in 2019. Clarfeld, a boutique "white glove" shop, offers a full range of services from family office to investment management to tax planning and bill pay services, among other things, Weyrauch said.  

In 2021, Citizens hired Weyrauch — a veteran of TIAA, where he had worked for around three decades and helped build up the wealth business — to replace Ryan Parker as the wealth head. That same year, it announced plans to buy Investors Bancorp and San Francisco-based JMP Group, an investment bank. 

In 2022, it acquired 80 East Coast branches of HSBC, closed its purchase of private investment banking firm DH Capital and bought assets of Kensington, New Hampshire-based registered investment advisor Paladin Advisors. 

In fall 2022, Citizens announced plans to launch a new private bank, Citizens Private Client, by the end of the year. The program, which targets clients with $200,000 or more of deposits or investments, offers clients not only a financial advisor, but also a "dedicated relationship manager" and a certified financial planner as part of a team service for the clients, according to a press release at the time. The bank said it was aiming to hire around 200 financial advisors and relationship managers for Private Client. 

"We're on pace to have 125 private client relationship managers in seat by the end of August," Weyrauch said.

Citizens also introduced an offering called CitizensPlus around the same time, which incentivizes qualified customers to begin working with a wealth manager and offers cash rewards and lending discounts.  

Read more: Citizens on the hunt for Florida wealth manager following deal spree

"No, we do not have a strong brand," Weyrauch said, adding that the bank was considering ways to invest in better marketing for its wealth business — which it expects to double in the next few years. 

However, he believes the firm has potential to take on not only peer regionals, but also the biggest names in the business. 

"That's the Morgan Stanleys, the Merrills, the Ameriprises of the world," he said. 

The missing ingredient? 
The secret sauce might just be where some of those heavyweights, and peers around the industry, are said to be falling short — talent development. Nearly three-quarters of financial advisors with three or fewer years on the job are failing out of the business, according to research published in June by Cerulli Associates. 

Weyrauch said he wasn't surprised by the sobering data, given the sink-or-swim nature of many industry training programs he had known of. 

"Some of these firms — they onboard new talent and they train them, and then they tell them to pick up the phone," he said. "It makes it really hard to succeed." 

In the Cerulli report, 69% of surveyed "rookie" advisors said they had to build their entire client books on their own. 

Read more: Advisors handling $2.4T of assets are retiring, as young talent flees the industry

At Citizens, new trainees go through a three-month new hire program and are focused not on sales, but customer service, during this period. 

"It's been very much centered on leading toward the financial planning experience," Weyrauch said. 

When trainees graduate from the new hire program, they continue getting assistance from coaches for years. They also receive a mentor who previously went through the program. In addition, Weyrauch said, advisors have recourse to a "centralized hub of expertise" consisting of around 30 certified financial planners. Experts from "planning teams" not only create plans for clients, but also help advisors prep for a client meeting and even accompany them into the meeting at times, he said. 

"Out of those training classes, we're seeing much lower attrition from FAs, much greater success earlier in their careers," Weyrauch said, adding that in 2022, even with a difficult market environment, Citizens had grown fee revenue and sales "in a meaningful way."

The focus on financial planning has also proven to be a hit with clients, Weyrauch said. 

Victoria Zhuang

"We're probably going to deliver over 25,000 financial plans this year," he said. 

Weyrauch said investing in young talent should translate into greater loyalty and ease of hiring. 

"They're so much less likely to take that phone call from someone (else)," he said of the young advisors at Citizens — who can also come from among the 18,000 employees working across the bank, thanks to a newly launched internal mobility program. 

"We just onboarded our eleventh new hire class since I joined two years ago. And we just graduated about 30 people from our new hire program," Weyrauch said, adding that he had seen "net positive gains from a headcount perspective" and that some new trainees joined through word-of-mouth referrals, suggesting it had been well-received. 

Waiting in the wings  
Finally, there is room for many advisors to grow in their careers at Citizens, Weyrauch said. It offers services to the mass affluent from a virtual financial advice channel, as well as the affluent — "probably our fastest growing" channel, he said — and increasingly, the high net worth and ultrahigh net worth. 

Read more: Godfathers, feeding tigers, à la carte: how RIAs can win UHNW clients

"There's a huge opportunity because of the diffusion of the high net worth client service model," Waxelbaum said, noting that former players in that space like Lehman Brothers, Credit Suisse and Bear Stearns had seen their presence diluted after buyouts and ensuing attrition of their ranks in the wake of the 2008 financial crisis. That, coupled with "explosive growth of the ultrahigh net worth segment" in recent years has created an opening for new arrivals like Citizens. 

"But it's so highly competitive that it's really hard to make a call on who's going to prosper," Waxelbaum said, adding that in Citizens' case, the First Republic hires might still be seen as just an isolated event. "They don't have a critical mass that anybody can call game on."  

Jason Diamond, an industry recruiter who is the vice president and senior consultant at Diamond Consultants, agreed that he didn't hear much about Citizens in conversations with advisors planning moves — "which is not to say that they won't have success going forward."  

"They need to win a few meaningful, wirehouse-type teams. And that really delivers proof of concept," Diamond said. "Once you prove that you are a legitimate option for a sophisticated corner office-type team, it's much easier to convince future recruits down the road."