Traditionally a transactional brokerage business, Smith Barney – Citigroup’s advisory network – showed its ongoing commitment to fee-based w...

Traditionally a transactional brokerage business, Smith Barney – Citigroup’s advisory network – showed its ongoing commitment to fee-based wealth management, reporting a 33 per cent increase in fee revenues for its forth-quarter 2006 results. Like many of the large broker-dealer groups in the US, Citigroup’s Global Wealth Management division has been transitioning its advisors from a trading to a fixed fee model for ongoing advice. Smith Barney’s revenue growth was driven by the continued shift toward offering fee-based advisory products and services, according to the group, with transactional revenues increasing only 8 per cent for the period, due mainly, it stated, to the amount of new securities offerings in the market in 2006. The results also reflect the folding in of around 1,000 former Legg Mason advisors who were acquired in December 2005. Citigroup’s private banking business was in a building phase in 2006, reporting only an 8 per cent increase in revenues for the full 12 months, compared to the 20 per cent revenue increase reported by Smith Barney during the period. The group cited expense growth primarily following the net addition of 49 bankers since the fourth quarter of 2005. It said the private banking business was driven by international revenues over the quarter, reflecting strong growth in Asia capital markets products. Citi’s Global Wealth Management division reported total revenues of $10.18 billion in 2006, to which Smith Barney contributed $8.16 billion.