The new robo-advisor – called Citi Wealth Builder – invests the client’s money in one of six predefined portfolios made up of exchange traded funds (AND F). The portfolio is selected based on clients’ responses to a questionnaire that assesses their risk tolerance and total assets, among other questions. From there, the robo-advisor does the rest, monitoring the portfolio and rebalancing it as needed.
Customers who are members of the Citi Priority and Citigold programs can use the robo-advisor to create a portfolio without an advisory fee. However, they will still pay the fees charged by the ETF investments themselves, which range from 0.18 to 0.24%. Additional accounts will be charged 0.55% of assets per year, or $55 for every $10,000 invested.
Citi clients who are not members of either program can also use the new robo-advisor for the same advisory fee of 0.55% of assets per year.
The robo-advisor account requires a minimum initial investment of $1,500 to get started.
[READ: Citibank bank review 2020]
How Citi Wealth Builder Compares to Other Robo-Advisors
Like other big rival banks, Citi is struggling to grow its assets, and its latest move follows a popular industry strategy of bundling a range of financial services to encourage customers to do most, if not all, of their banking operations and their investments with a single bank.
Citi is one of the last major banks to offer a robo-advisor, after Bank of America, Wells Fargo, JPMorgan Chase and Morgan Stanley. These banks typically charge advisory fees of 0.35-0.45% of assets per year. So if you can score a free wallet, Citi’s offer might be right for you. If you can’t, Citi’s price is actually less attractive than most of its competitors.
And pure robo-advisors, including Wealthfront, Betterment, and Ellevest, as well as brokerage Charles Schwab, each offer a lower overall cost for their robo-advisor offering.
For example, Betterment, Ellevest, and Wealthfront each offer a robo-advisor with a 0.25% advisory fee and lots of great features like auto-rebalancing. Additionally, their portfolios are typically constructed with ETFs that have lower expense ratios, 0.8-0.16%.
Charles Schwab can fit them better, though. Schwab Intelligent Portfolios offers an account that does not charge an advisory fee – usually the highest cost for a robo-advisor. Its fees for ETFs are also competitive, and the broker offers free automatic rebalancing, although it requires a minimum account balance of $5,000.
But it’s important to remember that Citibank will be offering its robo-advisor as part of a broader suite of banking services provided under the Citi Priority program.
[COMPARE: Best checking accounts]
Benefits of Citi Priority Account Package
When you have at least $50,000 in assets or investments with Citibank, you can become a Priority customer, a program that offers you various benefits:
- Free checks, money orders and official checks
- Reduced prices on mortgages
- No stop payment fees or ATM exchange fees
- A 0.25% discount on HELOCs and no annual fee
- A 0.25% discount on personal loans and no annual fees
- No annual account fees on wealth investment accounts
- $4.95 stock trades with Citi Personal Wealth Management
- Increase thank you points beyond what you already earn for your Citi credit cards
Like much of the industry, Citibank is in the process of collecting deposits, and programs such as Citi Priority are a way to offer customers a lower-cost package of services to bring more of their business to the bank.
[READ: The best big banks of 2020]
At the end of the line
Whether Citi’s new robo-advisor makes sense for you depends on your personal financial situation. But if you can get robo-advisor service as part of the other benefits of being a Citi Priority customer, it starts to make a lot more sense for a wider range of customers.