Citi’s Wealth Boss Offers Retention Bonuses as Part of Revamp

“We drove the strongest quarter in years in investment flows,” Sieg said.

His abrupt personnel changes rankled some executives, prompting bankers to defect.

In response, Citigroup offered dozens of retention bonuses to staff, particularly in the Wealth at Work unit and to some in the private bank, rewarding them for staying into next year, according to people familiar with the matter.

That move followed the exodus of about 20 people from Wealth at Work, which caters to clients in professional services such as law firms.

Their leader, Joe Ryan, was named interim head of the franchise after the unexpected resignation of his boss, Naz Vahid. But Ryan jumped to BMO Financial Group after he wasn’t interviewed to replace her permanently, a person briefed on the matter said.

The private bank, serving the wealthiest clients, has lost about 10% of its most senior bankers in North America over the past year, reducing its fleet to about 120.

Departures included top rainmaker Luke Palacio, who catered to Florida’s billionaires. He joined Bank of America, which announced two more hires from Citigroup late last week.

Even some new arrivals didn’t last long. Just four months after Sieg named Don Plaus, his former deputy at Merrill Lynch, to replace Halé Behzadi as head of private banking in North America, Plaus left for what the firm called personal reasons.

Lower down, the bank is hiring more brokers to its entry-level wealth segment, Citigold, sweetening pay deals and improving the online self-directed investment platform.

“It doesn’t have the capabilities a Schwab may have, but that’s in the plan,” said head David Poole. Assets invested through that platform were up 70% this year, he said.

Wealth at Work head Kris Bitterly is looking to expand in the United Arab Emirates, Singapore and Hong Kong, and to smooth cumbersome processes. “There was a bias in the past to everyone wanting in-person, white-glove service,” she said. “But clients want to be able to choose.”

Attempted Upgrades

Technology and data remain headaches.

Citigroup’s systems have been outdated for years. But as client investing boomed during the pandemic, a pair of executives in Dallas — Japan Mehta and Shadman Zafar — promised managers that a new suite of tools was in the works.

The pair had previously worked together at Verizon Communications Inc., Barclays Plc and JPMorgan Chase & Co. before landing at Citi.

Bankers and their managers welcomed the pair’s presentations in New York, eagerly awaiting a replacement for clients’ In View desktop portal and an app to streamline processes.

The desperation grew so acute that one team even held its off-site meeting in Dallas to make sure technologists couldn’t forget them.

As time passed, wealth executives winced at how costs quoted to them would balloon with little to show for the increase, prompting jokes about “T-shirt sizing,” the buzzy Silicon Valley approach to budgeting, according to a former banker.

Meanwhile, risk and compliance teams spotted deficiencies in pricing, portfolio performance calculations and tax data, a group of former managing directors wrote last month in an unsigned letter to the board, describing a range of problems at the firm.

Bloomberg hasn’t been able to verify the identities of all the authors of the letter, which Citigroup has disputed as inaccurate with “a range of misguided statements.”

In the end, the promised projects didn’t materialize. Pressures from shareholders to keep a lid on companywide costs and from regulators demanding quick fixes to internal systems didn’t help.

Mehta has since moved to another part of the bank, and Zafar is now co-chief information officer for the whole company.

The wealth division has since assigned Joe Bonanno and hired JPMorgan’s Eric Lordi to oversee data and technology platforms. The firm says it has already started streamlining those operations to create better desktop and mobile app platforms.

Still, regulators’ demands that the bank fix broader data and risk controls are dragging on growth initiatives. For the wealth division, that means more than $100 million of its discretionary budget for next year is being diverted to fix such problems, according to people familiar with the matter.

“I’m comfortable we have ample tech dollars to execute our strategy,” Sieg said. The mantra, he added, is “no hobbies” — no distractions from the company’s core business. Cuts have so far included canceling a planned UK debit-card rollout and selling the bank’s trust business.

‘Pep in Their Step’

Many who remain are hopeful Sieg’s push to focus on clients will pay dividends. Insiders say he encourages clients to communicate their needs and pushes staff to talk with one another and other divisions.

“It’s been a past few years of not so much fun for folks in the wealth division,” said Dawn Nordberg, a former Morgan Stanley executive hired by Sieg to build “connective tissue” to other parts of the firm, such as offering advice to investment banking clients with newly earned riches.

After posting third-quarter gains, her colleagues seemed more optimistic, she said. “We’re seeing a bit of pep in their step.”

It’s still hard to assess how much of that improvement can be attributed to Sieg. Much of the industry reported higher client balances. Observers including Mayo are watching to see if Citigroup can narrow the gap.

“There’s nowhere for Andy Sieg to hide,” Mayo said. “Either he’ll be yet one more wealth manager to fail at Citigroup, or he’ll be the equivalent of Houdini.”

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