Citi launches dedicated service for advisors

Citi is redoubling its efforts to increase connectivity between its custom products and solutions group and retail advisors via its institutional platform with the aim of delivering solutions more effectively to the registered investment advisor (RIA) segment. SRP spoke to JP Connellan and Nicholas Parcharidis, Citi's co-heads of Americas, Private Client Solutions, about the bank's new approach to service, advice and daily advisor interaction as well as the emphasis on leveraging the bank's capabilities and expertise in delivering customised structured product solutions.

This is not about the launch of a new stand-alone business because Citi has worked with the retail client segment for many years and have been offering its products to retail high net worth and ultra-high net worth individuals globally for over 25 years, according to Parcharidis. "However, we are taking a new approach in the way we interact with investors so that we can deliver solutions more effectively to this segment," says Parcharidis. "We have created a dedicated website with an increased focus to respond to the growing demand from this client segment."

The bank believes the RIA segment will continue to grow and has deployed additional resources and people to better service those clients and "enhance their experience when investing in our products". According to Connellan, the US RIA market is one of the fastest growing retail segments for the structured products market. "We are seeing demand across all products and investments in this segment and our focus is education for them," says Connellan. "We want to provide our services and advice in one place, and become more visible to the RIA segment."

"Our goal is to provide a platform for clients to access the resources and tools they need to make informed investment decisions and bring efficiency to that process," says Parcharidis. "We have the experience in servicing the retail segment and the ability to respond to client demand, and the RIA segment will drive significant activity around our overall investment solutions offering."

Citi has been focused on better serving RIAs for the last two to three years and has dedicated a great deal of effort and resources to identify the needs of this segment and react to demand as it continues to grow. However, what really differentiates Citi is its global footprint and track-record in the structured products market and its track record covering ultra-high-, high-net worth and retail clients. "We have the platform, the structuring capabilities and we want to strengthen our distribution outlets to better deliver our investment solutions, as well as respond and address the needs of our clients," says Parcharidis, adding that the bank's Private Client Solutions (PCS) team also has the ability to customise and bring that expertise into the wider RIA segment which has different individual client segments.

"The aim is also being able to offer a more holistic approach and provide a one-stop solutions for our clients," says Parcharidis. "Some firms are good at certain things, but because of Citi's global footprint we can leverage our capabilities and offer ancillary services in addition to the traditional investment type products."

According to Parcharidis, the key to offer a better service to clients is to provide research, product development capabilities and expertise together. "Market professionals appreciate that and also the fact that we provide educational tools around our offerings to offer additional support to those RIAs in terms of the upfront delivery and also post-sales support," says Parcharidis. "Another element that differentiates Citi is its multi-asset global set up."

Connellan points that the PCS team is focused primarily on providing solutions to retail intermediaries like financial advisors and RIAs across all asset classes and can take advantage of the bank's global manufacturing capabilities "which we already offer to our ultra-high-net worth clients within the private bank and our retail clients within the consumer bank".

"Another advantage we are bringing to the table with this PCS team is that rather than offering just an electronic set up, we combine technology with access to solutions across different asset classes and markets so we can provide exposure to markets outside the US and respond to the needs from clients that require solutions from a global perspective," says Connellan.

On the use of wrappers and upcoming regulatory developments such as the DoL fiduciary rules that could impact the structured notes market, Citi remains agnostic. "We are well aware of the regulatory requirements around our retail offering," says Parcharidis. "We remain agnostic as of how we deliver our solutions whether delivered as a structured note or wrapped in a mutual fund. For us what is important is to be able to deliver what the clients want in whichever form. We are always exploring new ways of packaging and delivering our products, and if there is demand for a particular type of instrument we have the capabilities to respond to that demand."

According to Parcharidis, Citi already deploys different wrappers in the markets it covers because each market has its own particularities and to be competitive" you have to be flexible in the way you deliver your solutions".

The bank saw an "increase in activity and significant volumes" towards the end of the year in the flow side of the business as a result of the hike in the interest rates after the election. "During the year the main drivers of activity were rates- and fixed income-related events," says Connellan.

On the structured products side, investors displayed a moderately bullish outlook but also a cautious sentiment for many reasons including geopolitical events (Brexit), according to Parcharidis. "That uncertainty resulted in a bias towards protecting some of the downside risk and an increase in demand for partially protected structures," says Parcharidis, adding that in addition, because the low interest rates there was demand for yield enhancement structures, "which is a theme that appeared throughout the year".

Structured notes remain a flexible investment solution that can play a role in investment portfolios because they can be delivered in many forms to address market risk, timing and so on, according to Parcharidis.

"Our approach in the structured products market is to provide solutions that can sit alongside stocks in any portfolio and adapt to different risk profiles," says Parcharidis. "In 2017 we expect demand for index-linked ideas to remain high. Our ability to monetize market volatility across asset classes also shows the flexibility and value of these products."

Going forward, from a client perspective the bank expects interest rates to drive some of the activity, according to Connellan. "Preserving wealth remains a key factor for investors," he says. "There is also demand for accessing non-US equity markets and we are well positioned to provide that access and exposure."

Citi's Private Client Solutions Team provides a comprehensive suite of investment solutions across asset classes including fixed income, equities and structured product solutions aimed at private client, family offices, broker/dealers and wealth managers with a specific focus on RIAs.

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