Edward Jones teams up with Citi to provide retail banking services

Edward Jones is teaming up with Citi to break into the retail banking sector, less than a year after the firm gave up on starting a bank of its own.

The St. Louis-based financial services firm announced this week that it's entering a "strategic partnership" with Citi, a global bank with more than 200 million customers. The new joint effort will initially focus on providing savings and checking accounts to Edward Jones clients, but may expand into securities-based lending and other retail banking services.

"I'm thrilled about this partnership," said Lena Haas, head of wealth management advice at Edward Jones. "Partnering with Citi allows us to bring the strengths of Citi's products and services and digital experiences to our clients."

In 2020, Edward Jones tried to open its own industrial bank in Utah. The firm submitted applications to both the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions for the proposed company, which would have been called Edward Jones Bank.

But in October 2022, the plan fell apart. After lengthy discussions with the FDIC, Edward Jones withdrew its applications, citing "the current environment." Some industry insiders read that as a reference to the FDIC board's Democratic majority, which was seen as unfriendly to new industrial loan companies.

Now, almost a year later, the partnership with Citi is breathing new life into Edward Jones' banking dream.

"We've evaluated the current environment in terms of developing our own bank and decided to pursue the partnership route," Haas said. "It allows us to bring those capabilities — the products, the experiences — much sooner to our clients."

Some industry experts saw the move as a positive step for Edward Jones, but said it should have happened a long time ago.

"It feels to me almost like this was long overdue," said Jason Diamond, a vice president at the financial advisor recruiting firm Diamond Consultants. "I can't imagine working for … a wealth management firm, especially one of that size, that doesn't at least give you access or the ability to access banking and lending solutions."

In Diamond's view, the new partnership is at least partly a way for Edward Jones to fulfill a promise to its own advisors — and, perhaps, to address their frustrations.

"I think they probably got a little bit ahead of themselves," Diamond said. "They went out to their field of advisors and sort of promised — or signaled, at the very least — that they had banking and lending capabilities coming down the pike. And then when they abandoned that plan in October, I think a lot of advisors said, 'What the heck?'"

Read more: Edward Jones boasts advisor gains and strong profits in Q2

However belatedly, Diamond believes the firm is filling a gap in its services — and partnering with a reputable bank like Citi, he said, is "a win."

According to Haas, Edward Jones feels the same way.

"We looked at 15 different firms that we could potentially partner with, and we determined that it's through Citi that we will provide the experience, the products that we could just be really proud of for our clients," she said.

Citi was upbeat about the collaboration as well, hailing it as good news for Edward Jones' clients.

"We are pleased to partner with Edward Jones to offer an innovative and client-focused suite of banking services to cover their clients' short- and long-term goals," Eduardo Martinez Campos, head of Citi Wealth Services and Strategic Investments, said in a statement. "When personalized advice and wealth management is complemented with integrated banking services, clients benefit from a complete set of financial solutions, allowing for more holistic planning opportunities and growth."

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So far, 2023 has been a good year for Edward Jones. In both the first and second quarters, the firm reported double-digit growth in its revenues and steady, if modest, expansion in its advisor headcount. That marked a turnaround from the previous two years, when Edward Jones was losing both profits and advisors.

The loss of those advisors, Diamond said, may be one reason the firm was motivated to finally provide banking services.

"Edward Jones is trying," Diamond said. "They are very clearly seeing the advisor attrition. They are hearing advisor frustrations … because the firm has in many ways been behind the times. One such way is just not offering things like banking. So I think this is clearly an attempt to try and address that, which is a good thing."