Citicorp is preparing a wrap product that will break with the traditional practice of paying sales commissions to brokers.

The New York banking company's wrap accounts will provide sales representatives with a share of ongoing fees that investors will pay to Citicorp's in-house money managers.

"We're moving in our product mix towards more managed money and fees based on assets under management," said Mary Ann Allison, vice president with Citicorp Investment Services, the banking company's retail brokerage.

Industry experts said Citicorp is making a smart move. Paying brokers according to the assets they gather, not the individual products they sell, "makes eminent sense," said Joy Montgomery, president of Money Marketing Initiatives, Morristown, N.J.

"You're encouraging representatives to foster relationships, not transactions," Ms. Montgomery said.

The wrap accounts will supply Citicorp with assets by creating portfolios that include the banking company's own Landmark mutual funds.

These funds will be "wrapped" together, according to customers' investment goals, by money managers in Citicorp's Global Asset Management Group. The managers will change the investment mix as market conditions change or customers' objectives shift.

Citicorp is joining just a handful of banks that offer wrap products, which typically levy annual fees of between 1% and 3% of assets under management. A spokeswoman said Citicorp will set its charges as it gets closer to launching the products through a pilot program later this year.

The spokeswoman also said Citicorp is looking at adopting a similar asset-based payment structure for other investment products. But, the spokeswoman added, the consideration is part of a broader, ongoing review of the way retail brokers are paid. Right now, these sales representatives primarily earn one-time commissions from product sales.

If it does adopt a compensation system based on ongoing assets, industry observers said, Citicorp Investment Services will become one of the first brokerages in the country to do so.

With the exception of Merrill Lynch and a handful of other brokerages, most investment firms rely on commissions and bonuses to compensate representatives.

The commission tradition may be hard to break, industry experts said, but customers would be well served by the change.

The banking company could also make out better, since brokers would be encouraged to earn more money by uncovering more of customers' investable assets, Ms. Montgomery said.

Ms. Allison of Citicorp said brokers are looking at asset-based pay as an opportunity.

"They see it as supplying stability and long-term compensations," she said.

The wrap product is the first offering to emerge from a revamping that's under way at the banking company's mutual fund business.

In February, Citicorp picked David J. Browning, executive vice president of the Global Asset Management Group, to head this review, which is meant to increase sales by revamping certain products and services.

Industry observers have said Citicorp's review may lead to a closer linking of the brokerage to Citicorp Global Asset Management, the money management arm. Right now, the brokerage is part of the consumer bank.

The shift would place major investment units under the same banner, better positioning Citicorp to fulfill its goal of competing with brokerage giants like Merrill Lynch, the analysts said.

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