Early last year, Citi group announced the combination of its consumer wealth management and private banking units into Citi Global Wealth, uniting businesses that serve mass-affluent to ultrahigh-net-worth clients. Leading the business, which boasts half a million clients and $800 billion in client assets, is Jim O’Donnell, a 23-year Citi veteran.
O’Donnell, who most recently headed global investor sales and relationship management at Citi, doesn’t have a wealth management background. But he hopes to gain the confidence of the nearly 3,000 financial advisors within Citi Global Wealth by being responsive. “Listening is probably the most important thing,” says O’Donnell. “Trying to ensure that we listen to them and adapt and deliver is key.” In a wide-ranging interview with Barron’s Advisor, O’Donnell lays out the business’ growth goals, including doubling the size of its advisor corps. He explains how geopolitics, a pandemic, and a global economic slowdown may impact Citi’s expansion goals. And he reveals how studying religion early in life prepared him for a career on Wall Street.
You didn’t study economics or business in college. Rather, you earned a degree in comparative religion from Princeton. At one point you even considered becoming a priest. That’s not the usual path to Wall Street. I’ve had people say to me, “Wall Street and religion, how does that work?” I actually don’t see a contradiction. Studying comparative religion has helped me a lot. I got to meet people from different backgrounds and faiths from around the world. And studying the world religions really helped me see people as the same: We have the same values. We care about our children, our families, our lives, our parents. The ability to understand people has been a huge part of the business. And some of the best people I’ve met in my entire life, the most generous and kindest, work in our industry.
What was the goal in creating Citi Global Wealth? When you look at Citi’s businesses today, we’re one of the world’s leading global banks. And what Jane [Fraser, Citi’s CEO] saw, the gap in our portfolio, is that wealth management is a high-value business. It can have high returns. It also has a lot of synergies with our existing businesses, whether that be our corporate investment bank or our personal bank. Being a strong business in between the two is something that we aspire to get to for wealth management.
For example, the opportunity to source clients from our retail banking branches in the U.S. and add more value to them by referring them to wealth management. In fact, last year, we had over 26,000 referrals from our retail bank to our wealth management business. We made over 700 referrals last year between our investment bank and our private bank. Seven hundred clients is not a lot, except that they had an average net worth of over $400 million.
Citi Commercial Bank is another key growth area for Jane. Of that business’s clients around the world, 90% are private companies. That’s a significant opportunity from a synergy perspective for our wealth business, for servicing employees in those private companies but also the founders. So our goal is to leverage the synergies within Citi.
Jane Fraser has said she wants to make Citi into a “wealth management powerhouse.” What constitutes a wealth management powerhouse? First, we want to leverage the businesses we have. We don’t need to be the best at every single part of wealth management. But in the areas where we choose to concentrate, we want to be a powerhouse. We’re not starting from scratch. We’re a $7.5 billion business today. We’re a top-five private bank around the world. In Asia, the fastest growing market in the world, we are a top-three private bank. Our business that focuses on delivering banking and wealth solutions to law firms is number one in its field. It’s now called Wealth at Work, and we’re broadening that offering out beyond law firms. So we already have some pretty impressive rankings that we can build upon. I believe over the next five-plus years, we can dramatically grow our business.
Can you attach numbers to your growth goals? Our goal is to double the number of advisors in the next five to six years, taking the 3,000 we have today to 6,000. Roughly 2,000 of the 3,000 are in our Citi Gold business, which caters to individuals with $2 million and above, just below the private bank level. We have about 700 private bankers and investment counselors in our private bank, which is part of our advisor base. And our goal is to double that. And then in our Wealth at Work business we have about 300 or 400, and our goal is to double that. On the client front, it’s the same. We would like to double the number of clients in our business in the next five to seven years. Obviously, market conditions will dictate that.
Can you talk about the plan for meeting those goals? What are the key parts of the strategy? The first is hiring and retaining our best talent to scale. We are understaffed in many of our key markets. Continuing to grow markets is another big piece of it. In the U.S., New York, Florida, Texas, and California are key geographic areas for us. In Europe, we just opened our first private bank office in Germany and our first private bank office in France. We believe catering to the high-end, ultrahigh-net worth client base is a significant opportunity for us. And we are enormous believers in the future of Asia from a long-term growth perspective.
The next key is technology. While it is still very important to be high touch, we have to have the right digital capabilities. We have to ensure we have the right tools for our advisors and the right tools for our clients, and equally importantly, the right tools from an infrastructure and product perspective. So one of the things I did with our team in the first year of this job was to unify our technology business across the globe under one leadership structure to ensure both efficiencies but equally that we’re able to develop things in a much quicker, integrated fashion that can be deployed to all of our client channels.
What initiatives have you taken to attract and retain talent? We’ve done a few things. We’ve significantly grown our internal recruiting staff to help us on the external side. Our retail bank delivered over 50,000 client referrals to Citi Gold last year. It’s 26,000 already this year. The referral piece, having captive clients to give our advisors to build and grow and add value to, is very attractive. We want to ensure that we leverage the linkages and partnerships with our commercial bank and our investment bank; those two-way referrals are critically important.
Second, we’re very focused on mobility. I think people want to know that they can grow their careers here. I don’t want to necessarily go out and hire every person on the street to fill a role. We want to give people the opportunity to grow and take on larger parts of the business or move into different client channels. And finally, we’ve more than doubled the size of our training program.
The competition for talent in wealth management today is intense. So not only do we need to recruit and retain, we also have to train and create new talent. And that’s something that I’m passionate about.
The world of global business has become more challenging over the past few years. We now have Covid, geopolitical tensions, the specter of global recession. Does that complicate the task of expanding in overseas markets? When I first took on the job, we weren’t looking at massive rising rates, we weren’t looking at inflation, we weren’t looking at potential recession or continuing Covid challenges and lockdowns and slowdowns in Asia. Having said that, we think the dynamics of wealth management are still incredibly strong, and the growth of the middle class around the world, and the continued rise of high-net-worth individuals, we think will continue for decades to come.
So understanding the geopolitical economic environment is critical. Yes, we’ll have to make judgments. And we’ll know more about that in the next 12 months or so. Maybe us and others will need to smooth out or slow the pace of investment to be more realistic. Ultimately, not only do we have to deliver for clients, but we also have to deliver for our shareholders. So there has to be a balance.
But we still have to plan for the future. We’re focusing on keeping our investments in place, maybe pacing them out a little bit more. But the worst thing we can say is, “Let’s stop everything.” Jane and our board didn’t decide to invest in wealth management for a 12-month window. This is a multiyear project that we will get right and that we see as one of the core businesses of Citi going forward.
You don’t have a wealth management background, but you’re now in charge of 3,000 advisors. How have you sought to win their confidence? Listening is probably the most important thing. When you look at the wealth business, so much of the client connectivity is going to be through our advisors. Trying to ensure that we listen to them and adapt and deliver is key. What are the problems we have in delivering the best in each of them? What can we do better?
One example we’ve had is that, looking at how we deliver products to each of our channels, we sometimes said, we only deliver this product to the private bank channel, and not to others. So from listening to advisors, one of the things we’re changing is that we’re delivering products based upon the suitability and net worth of the client and not the channel that they’re in.
How do you unwind and recharge? It used to be going to the gym very aggressively. Now, as I’ve gotten a little older, I love to walk. I find it to be one of the most relaxing, meditative things you can do. I’ll spend four or five hours walking around Manhattan, and stopping, unfortunately, at my favorite restaurant for a meal. Or I’ll walk near my house, outside of the city.
How much time do you spend during these long walks looking at your phone? I try to stick to at least one day a week, and obviously it can’t be Monday through Friday, when I don’t look at my device. So when I go for a walk, I either don’t take my device with me, or I turn it off. All of us need time to step away and think.
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