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Gone! Citi Steals Trails and Fee's from advisors

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Oct 19, 2009 2:14 am

In one fell swoop Citi has announced a plan to phase out paying its advisors’ comisions and trails by 2011. Citi wants its best advisors to join into large teams of 7-10 FA’s and organize as quasi RIA’s only offering fee based products.  As an advisor with 95% of my clients in traditional brokerage relationships which pay trails I am concerned with the idea of reinventing myself and loosing more than 200K in gross from trails on funds and annuities.  I have trailing 12’s of over 500K and have other options.

The idea of joining a team sounds terrible.  Citi wants us to change our business model dramatically and at the same time comingle our businesses to make it harder for anyone to leave. 

Seems like you would have to be pretty stupid to do this to yourself.  Its grand theft and shamefull that Citi is doing this to the advisors that have put on their game faces and gone to work during its time of need.

Oct 19, 2009 2:24 am

You should have left a long time ago(HINT when Citi sold Smith Barney, did you think it was going to get better for you??)

Oct 19, 2009 12:25 pm

Not being harsh, but stop complaining about it and leave. With your T-12 (assuming that is your T-12) you should find some takers in the market. 

Oct 19, 2009 1:03 pm

I am assuming he doesn’t have t-12 of 500K anymore(he mentioned it like he has done it a couple times, but not currently)

Oct 19, 2009 4:02 pm

fund will still pay trail and C just keeps it?   thats the plan

  is that legal  
Oct 19, 2009 5:35 pm

I wish I could say I am surprised

Oct 19, 2009 6:24 pm

[quote=Shania Twain]fund will still pay trail and C just keeps it?   thats the plan

  is that legal  [/quote]   Don't know if it's legal, but someone should approach an attorney. It sounds dodgey that a firm thinks they can take compensation/pay away from an FA and keep it for it's own purposes.
Oct 19, 2009 7:58 pm

Do you think a wirehouse cares about what is legal and illegal? If they get caught doing something illegal they just pay the fine and move on

Oct 19, 2009 8:00 pm
Greenbacks:

Do you think a wirehouse cares about what is legal and illegal? If they get caught doing something illegal they just pay the fine and move on

  Sad, but true.
Oct 19, 2009 8:56 pm

[quote=benfranklin][quote=Shania Twain]fund will still pay trail and C just keeps it?   thats the plan

  is that legal  [/quote]   Don't know if it's legal, but someone should approach an attorney. It sounds dodgey that a firm thinks they can take compensation/pay away from an FA and keep it for it's own purposes. [/quote]   They could convert everyone to salary if they wanted to.  We are at-will employees.  Our compensation structure can change anytime the employer wants.  Ever work at a bank or a wirehouse?
Oct 19, 2009 9:06 pm

Firms have been doing this for years! Your clients are paying 12b-1 fees in managed accounts, the firms are just keeping them. BofA says that they use these to offset clients fees. Yeah right. BofA reduced trailer payouts a few years ago and if you jumped through all of their stupid hoops and PB&I met its plan, they gave the money back to you in 3 year restricted stock units. Hey thanks Ken! Annuity payouts were chopped years before that. Do you think insurance companies aren’t paying the bank 6% and 8% on those? Of course they are, the bank just pays you 5% and pockets the rest. Ask Shania, she’s in management.

Oct 19, 2009 9:36 pm

They also have an army of lawyers (that’s a slice of your payout) to scheme things while covering thier A##.

Oct 19, 2009 10:06 pm

I agree… Like it was the advisors fault that citi lost billions and hit 99 cents a share… Like if the advisors didn’t do right by their clients and now they’re gonna do right by them by joining teams of 10 who know one even knows…slaps in the face… Anyone know if the advisors are discussing any legalities of what’s going on?

Oct 19, 2009 10:56 pm

Not worth getting upset over. With your T 12 just make a couple of calls and find a new home asap. Easier to tell your clients you changed firms then go re-sell them on a different model. Especially since it’s Citi, I doubt your clients will be surprsed when you toss them under the bus. lol

Oct 20, 2009 1:43 am

Just pull up stakes and move on. The best thing you can do is find a new home, and let all  your clients know that they are incentivizing the FA’s to convince them to pay a fee, whether its suitable or not, and thats why you moved

A couple of years back after judicial decisions came down, i think, SB made a big deal about moving the fee based platforms to a fee for advice vs fee in lieu of commission platform. And they made all the brokers do proposed asset allocations for each client. And they made a very big deal of telling the FA's that fee based is not suitable for everyone. And now, here is their (former) parent, pulling this crap. If it was coming from anyone else but Citi, i would say it was unbelievable. But from Citi, its really not. This is a case of totally bad business decisions being made, whoever decided that this was a good idea has no clue about the business. If you thought the exodus from SB the last few years was amazing, just wait. CIS wont even exist in aa year or two if they go thru with this. I am so happy to be out of that environment. You have absolutely no control.
Oct 20, 2009 4:31 pm

Two words: go indy

  That's the only way to make sure you control your pay.   I hate to sound like a broken record but you don't own anything at a wirehouse, you are owned!   I left a few months back and it's the best thing I ever did.  No more worries about compensation.  Just produce and get paid!
Oct 22, 2009 7:22 pm

Hey bro…just leave.  I did and it was the best thing I ever did.  Plan a year out.  Nurture your clients like you never have before all during 2010 and take off Ja 2011.  You will take everyone you want.  The place sucks.  I feel your pain. I was at SB for almost 10 years. 

I get sweaty palms at the mention of their name.
Oct 28, 2009 2:49 pm

It’s wonderfull to be out from under the umbrella, isn’t it?  I feel like a car fell off my back…

Oct 29, 2009 12:33 am

Thanks to everyone for their comments.  I agree that it is time to go.  I am looking at options and just recently learned that MSSB signed on a guy in NY last Friday.  I did not think it would be possible to go there because of the links to Citi but apparently it is an option.

I think that SB would be my best choice since I currently use Nextgen and am fully aware of how thinks work there.  I will also look into WFS, UBS and possibly going indy.

Oct 29, 2009 10:49 am

"I will also look into WFS, UBS and possibly going indy."



oh no, oh god, and most definitely.