Citigroup Inc is planning a 500- person hiring spree over the next three years for a new wealth division catering to junior employees at private equity offices, consultancies and accounting firms, betting those clients will some day join the ranks of the ultra wealthy.
The bank started the unit, known as Wealth at Work, last year and tapped longtime private-banking executive Naz Vahid to oversee its development.
Ms Vahid has spent years leading the private bank’s law-firm group, which counts 50,000 lawyers and 1,000 firms as clients.
“We are already the undisputed No. 1 in the space, and we’re going to take that law-firm group model and apply it to these other verticals,” she said in an interview from Citigroup’s headquarters in Manhattan’s Tribeca neighbourhood.
Her division is a key component of chief executive Jane Fraser’s plans to remake Citigroup into a wealth-management powerhouse.
The business generated US$353 million (S$487.7 million) in revenue in the first six months of the year – a 3 per cent jump from a year earlier – and was the only one of Citigroup’s wealth operations that posted an increase for the period.
The law-firm group got its start more than 50 years ago with a simple strategy: offer wealth-management services to employees at the world’s biggest law firms, many of whom were already using the bank’s cash-management, financing and custody services.
The firm developed an expertise in salary policies and payment trends at top law firms, which it used to offer wealth products to meet those lawyers’ financial needs.
“We understand bonus payout structures, changes in income when our clients go from associates to partners, unique retirement needs,” Ms Vahid said. “We know when they’re likely to buy a house, when they’re likely to begin planning for college, and more. We know the career life cycle.”
Some of the most successful attorneys can earn as much as US$20 million a year. Before they get there, though, many junior employees are saddled with hundreds of thousands of dollars in student debt, making them unlikely candidates for wealth-management businesses that typically cater to high-net-worth individuals.
At Citigroup, the average net worth of the firm’s private-bank customers is a whopping US$400 million. But her division is different. “We acquire clients when they have more debt than money,” Ms Vahid said.
“We get them when they’re early in their careers, when they’re not yet wealth clients and they’re extremely busy individuals,” she said, adding, “We get them young and we keep them.”
Citigroup’s wealth-management offerings have long paled in comparison to rivals. The firm finished 2021 with US$7.5 billion in wealth-management revenue, a 7.6 per cent increase from five years earlier. That compares with jumps of more than 11 per cent at Bank of America and 23 per cent at JPMorgan Chase.
For Ms Fraser, the decision to expand the bank’s wealth-management offerings was “blindingly obvious,” she said at Citigroup’s investor day earlier this year.