Morgan Stanley isn't the only firm that sees a way to gain possibly trillions more in AUM via workplace clients.
Its Wall Street rival Citi is looking in much the same direction. In announcing a new head of Citi's Wealth at Work division, wealth head Andy Sieg estimated that the firm's clients have $5 trillion under management at other institutions.
According to a memo from Sieg released Wednesday, longtime Citi exec Kris Bitterly is slated to become head of the firm's Wealth at Work division in September. That line of business has long specialized in helping lawyers and law firms with financial planning and other services, lately extending to asset managers and other professionals.
Sieg suggested in his memo that Wealth at Work will be one of Citi's main avenues for bringing in assets that current clients might now hold elsewhere.
"Wealth at Work is a critical growth area and one that clearly sets us apart from the competition," Sieg said in the memo. "This is a proven business with a loyal client base that has traditionally been rooted in banking and lending. It is time for a laser-like focus on winning our clients' investment assets."
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Morgan Stanley playbook
The statement bears similarities to remarks Morgan Stanley CEO Ted Pick made on Monday at his firm's annual U.S. Financials, Payments & Commercial Real Estate Conference in New York. Pick also cited a $5 trillion figure for assets clients hold elsewhere and suggested a way to bring more of that in is through the firm's Morgan Stanley at Work unit. Morgan Stanley at Work offers a variety of services to employers, including helping them set up retirement plans for employees and overseeing equity compensation policies that pay workers partly in company shares.
"There's $5 trillion of wealth held by those same people who work at company XYZ whose comp plan we administer," Pick said.
Jason Diamond, an executive vice president at the recruiting firm Diamond Consultants, said these large firms' workplace divisions are just one way they have to usher new clients and assets into their wealth management businesses.
"This is helping your advisors via means that they couldn't necessarily use on their own," he said. "If you can feed them the CEOs of companies that you have the retirement business for, that's great."
What kind of wealth business to have?
Citi also has an advantage in having a well-established retail and commercial bank. Now Sieg and his fellow executives need to decide exactly what sort of wealth business they want to have, Diamond said.
Are they going for something closer to what the now-defunct First Republic Bank offered — specialized banking and advisory services meant mainly for affluent clients? Or, Diamond said, do they want to try to go head-to-head with firms like Merrill, which tend to work with clients of all wealth levels?
The distance between Merrill and Citi remains substantial. Merrill reported record revenue of $5.6 billion on $4 trillion in client assets for the first quarter. Citi reported $1.7 billion in revenue — $181 million of it from Wealth at Work — for the same period.
'Everybody knew something like this was coming'
Diamond said Sieg's recent hires and promotions suggest he's starting to push forward harder in his ambitions and that his plans for the firm will most likely become clearer. Sieg announced last week that Citi had hired Dawn Nordberg from Morgan Stanley Private Wealth Management to oversee bank-to-advisor referrals through a new initiative called Integrated Client Engagement.
Diamond said Sieg appears to want to have all the pieces of his management team in place before making a big push to recruit advisors and build AUM.
"It seemed really unlikely that he would resign from being the head of Thundering Herd, and having one of the most prestigious positions on Wall Street, to lead a sleepy wealth management unit at Citi," Diamond said. "So everybody knew something like this was coming."
Back to the Merrill well
Sieg's memo on Wednesday also announced that Keith Glenfield, formerly Northeast Division executive for Merrill Lynch Wealth Management, will succeed Bitterly as Citi's head of investment solutions. Sieg himself came to Citi last year after serving as president of Merrill Wealth Management and has turned to his former employer for other recruits in the past. He, for instance, tapped Don Plaus, the former head of Merrill private wealth, to run Citi's private bank in North America.
As for Glenfield, Sieg said: "I've worked closely with Keith over the years, and I'm delighted he's decided to bring his formidable leadership skills to Citi Wealth."
Sieg's memo says Glenfield was at Merrill for 29 years, where he led the firm's investment solutions group and personal retirement unit within Global Wealth Management.
"During his tenure, Merrill's fee-based investment offering expanded to more than $1.5 trillion," according to the memo.
A spokesperson for Merrill declined to comment.
Bitterly has been at Citi since 2008, following stints at Credit Suisse and JPMorgan. Sieg's memo credits her for contributing to the firm's Project Simplify to streamline its business, as well as its offerings in alternative investments.
"Importantly, Kris is a trusted voice to our clients on investments and portfolio implementation," Sieg said in the memo. "I am confident she is the right person to take this high-growth business to new heights through a sharper and more comprehensive focus on investments."
Both Bitterly and Glenfield are scheduled to start their new positions in September.
Diamond said he expects to see Citi's wealth management business to start picking up its pace.
"It makes sense to want to staff up to a certain degree before you are ready for prime time," he said. "You do not need to be at 100%, but probably 80% before you go out and make all your big splashy advisor hires."
