Profile: Paul Carter

In March, Citigroup announced the formation of a new consulting enterprise, Citigroup Institutional Consulting (CIC), which came out of the gate with $45 billion in assets. The choice of the executive to run CIC was out of the blue. Paul Carter is no ex-wholesaler or adviser-rather, he’s an alarmingly youthful Australian (he is, in fact, 33), armed with a Harvard MBA (he’s a Baker Scholar, and graduated in the top 5% of his class) and seven years of consulting at The Boston Consulting Group. He’s also a prototype of the new breed transforming financial services-formidably intelligent but careful not to flaunt it, personable, a steel-trap mind moderated by affability. PLANADVISER talked to Carter about the whys and wherefores of CIC.

What led to the creation of CIC? 

Changes in the market require new thinking. We recognized this internally but also were told by the very top institutional producers at Smith Barney that we needed to make additional investments and rethink our approach in order to allow them to compete properly.

Who are these top-end advisers that will be invited to join CIC? 

These are real veterans, some of them going back to EF Hutton days, starting as traditional brokers but increasingly evolving into fee-based advisers. They are leaders in the managed accounts world, the alternatives world, the very top-end producers in the entire Smith Barney group. Their clients (especially in the foundation and endowment world) are very sophisticated. We have to be able to deliver to these clients the very best that Citigroup has to offer.

How many consultants will you support at CIC? 

As of now, we have 27 teams, with about 70 consultants in total. They’re spread across 25 offices in the US. Our challenge is to make sure that every one of those 27 teams wins its next RFP, and the one after that. That means giving them the best research, the best technical and operational capabilities, and substantial marketing and communication collateral and support.

Will they be compensated differently? 

Not in the short term.

Will you recruit from outside Smith Barney? 

Yes, as soon as we’re totally confident that we have this first iteration hitting on all cylinders within Citigroup. This is going to cost money. The new Citigroup is famously tight in that regard. I am budgeting now and, at this point, haven’t been denied anything. The institution understands the importance of this effort.

How about letting CIC members act as fiduciaries? 

We’ll look at this on a case-by-case basis. Where it makes sense, we’ll do it.

The world is moving remorselessly toward DC solutions: Aren’t you missing the boat here? 

When we analyzed the business of our senior institutional consultants, [we saw that] their clients run the gamut of foundations, endowments, Taft-Hartley funds, with both DC and DB plans. We believe that, to serve these clients, you need wider expertise than just DC. We’re creating investment policy statements, asset allocation advice, manager selection and monitoring, and performance measurement—much of which is applicable to the DC world. Our sweet spot is the mid-size institution—that’s our bet.

What’s a nice Melbourne boy doing running CIC? 

The answer is simple. My wife, Wendy, wanted to move to New York, and I did as I was told. There is no doubt as to who makes the big decisions in our household.