When Debby McWhinney was named to run the remaineder --- the stub --- of financial advisors left at Citigroup banks, the negative reaction to her plans was fairly quick and strong. I immediately got calls from Citi bank brokers who complained that Debby was "Schwab-izing" Citibank. While they protested ( see my April 1 post), they were being forced into fee-based business and into teams, I wondered if it weren't the right thing to do. Banks are bad --- or have a lousy reputation --- at being good at investment/financial planning advice.
Do you agree? I mean it works for Schwab: You outsource what you are not good at or what simply doesn't make sense. (Schwab can't have an army of FAs, since it would be in direct competition with its institutional unit's clients --- the approximately 6,000 FAs --- it serves.) Schwab has a several thousand RIAs/FAs to whom it refers its walk-in customers. Makes sense to me, especially for a bank.
Here is an excerpt of what I wrote: "Leading our April print issue for April and posted on our website is a story about how the new head of (what's left) of Citigroup's bank brokerage unit is undergoing a comprehensive makeover. Our reporting revealed that Debby McWhinney, a long-time financial services executive with long stints at BoA and Schwab, where she headed up its RIA business, intends to push Citibank's bank brokers into RIA-land, to wit, punish commissions and encourage fee-only advisory practices. She is also creating a network of outside RIAs to refer Citi bank clients to. The Citi FAs (the ones that didn't go into the Morgan Stanley joint venture) are not happy. Good idea? Or bad? Let me know, am canvassing for opinions."
In our story that leads the website last night/this morning, I think we've got our answer. Perhaps it wasn't such a great idea, well, if her move to a new position a non-wealth management job means anything. But I think she was right. And if she is not lying, she told our own senior editor Jerry Gleeson that FAs and assets are up. Hmmm. If someone knows something from the inside, give me a call. I want to know what the real verdict is behind her makeover.