Citigroup Inc.'s asset management arm recently hired A. Peter Cieszko Jr. from Nuveen Investments to head its effort to increase its U.S. private portfolio business, especially through third-party channels.
Mr. Cieszko will join SSB Citi Asset Management Group as a managing director in early July and will report to Wendy Murdock, the unit's chief operating officer-retail and retirement services.
In the newly created post, Mr. Cieszko, 40, is to oversee a unit that manages $40 billion of separately managed private accounts for high-net-worth people and institutions. He will also oversee third-party distribution of the $3 billion-asset Salomon Brothers mutual fund family.
Mr. Cieszko was a managed-assets expert at Nuveen Investments, a unit of John Nuveen & Co. of Chicago. In that job, he was responsible for distribution of the company's investment management services through broker-dealers and other third parties.
Separate accounts - managed portfolios of stocks or bonds based on a specified investment style - give wealthy investors more control over the types of securities they hold, which among other things can help them mitigate tax consequences.
SSB Citi is focusing on private accounts because they are expected to grow at a much faster clip than mutual funds, Ms. Murdock said.
Mutual funds, which have grown into a $6.8 trillion industry, are considered by many to be near their peak. At the same time separate accounts are becoming more affordable, observers said.
A few years ago most separate accounts required a minimum investment of $1 million or more. Now many asset managers are devising accounts with lower minimum balances. For instance, SSB Citi offers a multidisciplinary account with a $50,000 minimum investment.
The next step is to boost third-party distribution of SSB Citi's private accounts, Ms. Murdock said. In-house channels currently account for 92% of the assets in SSB Citi's private portfolio accounts, a spokeswoman said.
Ryan Tagal, a senior analyst at Cerulli Associates of Boston, said that private account services are a lot more difficult than mutual funds to sell through third parties.
"Separate accounts are different in the sense that you have to be as a distributor in touch with the client off the bat," Mr. Tagal said. Clients choose separate accounts for the high level of personal attention, he said.
Ms. Murdock said that SSB Citi will also look at ways to use the Internet as a communication tool. Since it has focused on selling private accounts through proprietary channels, the unit has "piggybacked" on other Citi Web sites, such as that of the Citi-owned brokerage Salomon Smith Barney.
One of Mr. Cieszko's challenges will be to devise the best way of using the Internet to communicate with private account clients from outside Citigroup, she said.
