Is Sieg's Departure 'Beginning of the End' for Merrill's Thundering Herd?
As for what other trends to expect, he said: “The growth of the RIA segment, if we follow this out by 10 to 20 years in the future, will probably be anchored by really large brands that don’t exist today and encompass many thousands of financial advisors. Think of it as cyclical creative destruction. What goes around comes around. Quite literally, in this case.”
Nevertheless, it’s “hard to say whether Sieg’s exit will hurt Merrill’s recruiting because the reality is the firm has already been cutting way back on their financial advisor recruiting for some time now, as reflected by the fact that forgivable loan balances are at the low water mark,” Nash added.
A Win for Citigroup
Meanwhile, Citigroup scored a big win by nabbing Andy Sieg, several industry consultants say.
“He’ll be a somewhat bigger fish in a somewhat smaller pond” at Citi, according to compensation consultant Andy Tasnady, managing partner of Tasnady Associates. After all, Tasnady said, Citi has “a little bit less than half the market cap of BofA, and he’ll be able to have more of an impact on some of the developments at Citi.”
As of Dec. 31, 2022, Merrill has client assets under management of $2.8 trillion versus Citigroup wealth unit’s $646 billion.
Specifically, Sieg will be “able to apply a lot of the industry leading, cutting edge-type innovations and directions,” at Citi’s wealth management business, which he worked on at Merrill, Tasnady said. “These are industrywide trends, such as focusing on larger clients [and] increased use of teams and teamwork.”
Also, Sieg can bring compensation approaches that encourage “higher growth [rates] of new accounts, growth in assets and … transitioning smaller accounts” to Citi service centers, the consultant said.
“These are things that Merrill has been pushing for 20 years and Andy, when he was originally at Merrill, helped promote” these issues — just as he did more recently at BofA’s division, Tasnady said.
Plus, Sieg “already worked at Citi [from 2005 to 2009], so he knows the organization and the people. He’ll be able to hit the ground running” more than other executives taking on such a role at a new firm, Tasnady explained.
What’s Next at Citi?
Citi’s courting of Sieg seems to be a sign that it means business — meaning a major return to the U.S. wealth management business, according to Louis Diamond, president of Diamond Consultants. Clearly, Sieg is well respected in the industry and must have come with a “hefty price tag,” Diamond said in an interview.
Citi hasn’t been a major player in the U.S. wealth management space since it began selling its interests in Smith Barney to Morgan Stanley in 2009 — though it did try to make a return a few times since then, Diamond explained. (All of Citi’s stake in Smith Barney became solely owned by Morgan Stanley in 2015.)
The hiring of Sieg represents a major move in the sector. “That’s the story” here that stands out most, according to Diamond.
(Photo: AP)
