Citigroup said Monday it is switching to a fee-based model in its retail investment business, eliminating commissions for its 600 in-house financial advisers by the end of next year.
The shift is an effort to provide clients with more transparency, Deborah McWhinney, head of Citi Personal Banking and Wealth Management, said in an interview. "Investors are getting very engaged in what they're doing," McWhinney said.
In addition to switching to a fee-based model, Citigroup plans to partner with independent registered investment advisers around the country to expand its in-house services.
Clients can still pay for services on a transactional basis if they so choose through the bank's national investor center.
Citigroup , among the hardest hit banks by the credit crisis, lost about 15,000 financial advisers earlier this year when it agreed to combine its retail brokerage Smith Barney with Morgan Stanley's wealth management unit. Morgan Stanley holds a 51-percent stake in the resulting joint venture, called Morgan Stanley Smith Barney.
Last month, Citi CEO Vikram Pandit said the bank plans to eventually sell the remaining stake in the venture to Morgan Stanley, which has the option to increase its stake after three years.