Citigroup Inc.'s plan to reposition its orphaned myFi service says a lot about the business challenges facing both the troubled banking giant and the wealth management business itself.

Citigroup decided this week to retire the year-old discount financial advice platform, which lost its referral pipeline after Citi sold Smith Barney. The company says it can generate more assets by cross-selling wealth management products through a single brand.

But analysts are skeptical on two fronts: Will wealthier customers invest with a company on government life support, and do they want to do it online?

Deborah Doyle McWhinney, who was hired in April to run the New York company's brokerage operations, said in an interview Wednesday that it folded myFi into Citi Personal Wealth Management, which will continue to offer financial advice online and through its call centers.

MyFi was created in March 2008 to handle Smith Barney referrals for customers with less than $500,000 in investable assets.

McWhinney said that by eliminating the brand and making the platform part of the personal wealth management division, which also includes 600 branch-based advisers, the online platform will not seem to be some sort of consolation for investors who do not meet a minimum investment threshold.

She said the decision to eliminate myFi was "more of a strategic expansion of the myFi concept" than an elimination of the platform. "Smith Barney had a client segmentation strategy that probably made sense for them," McWhinney said. "I happen to believe that online and call centers are positive strategic parts of a business that can be used as a proactive client sales model. I don't want customers to feel good or bad based upon where they do business with us."

Citi plans to offer the online platform to all of its customers. McWhinney would not detail how much the company plans to add. "Right now, our strategy is all about attracting clients," she said.

A spokesman said that Citi Personal Wealth Management was managing a portion of the $31.8 billion of investments within Citi's U.S. retail bank as of June 30.

In April, McWhinney said Citi Personal Wealth Management would include the wealth management "parts that Citi chose to keep," including myFi, after its Smith Barney combined with Morgan Stanley's brokerage unit in a joint venture.

McWhinney, who retired in 2007 as the president of Charles Schwab Institutional, said Wednesday that after a few months on her new job "it became clear" she had to simplify the Citi unit by consolidating the brand. "Coming from my background, I have learned that some people that are ultrawealthy like doing business online and through call centers and small investors like online and call centers and some like face to face," she said. "We wanted to make sure to accommodate the kinds of clients Citi is seeking, who tend to be entrepreneurs, professionals and the highly mobile."

After the Smith Barney divestiture, analysts are skeptical Citi will be able to add clients or assets to its wealth platform. Burton Greenwald of BJ Greenwald Associates in Philadelphia said Citi is still dealing with so many issues involving government bailouts and lending practices that wealth management isn't a consideration.

"I think Citi for a long period of time is going to remain under a cloud," he said. "They have had so much negative publicity that just isn't going to stop any time in the near future. It is going to be hard for Citi to attract substantial business in wealth management no matter what name they slap on that business. They are running uphill trying to build this."

Greenwald said wealth management is barely an ancillary business for Citi. "You have to recognize that in the big scheme of things, wealth management is a small contributor to Citi's wealth stream," he said. "They are looking for ways for it to be effective, but more cost efficient."

Sources at Citi said as a result of the decision to eliminate myFi, Andy Sieg, who was appointed in 2008 to run the emerging-affluent segment, will be reassigned or may leave the company.

McWhinney said Citi also decided to end a pilot program it launched on Long Island, New York, in June in which it placed myFi reps in branches to talk with investors with rising income.

There is a "much bigger opportunity with myFi" than targeting solely the emerging affluent, she said.

"If you look at the core Citi banking clients and the types of people in our client base, everyone that opens an account has access to a PC," she said. "We wanted to make sure our online platform could be leveraged by all of our wealth management clients and not just isolated to a small segment."

McWhinney said wealthy customers do not want to be shuffled from one platform to another. "Customers come in and they were on the myFi platform and then when they got a certain amount of assets would be shifted to Citi Personal Wealth Management," she said. "You cannot keep changing the services' name. It doesn't make sense to the investors. They say, 'Give me the help I need, stop naming me something.' "

Rus Prince, an analyst with Prince & Associates in Shelton, Conn., said most wealthy investors are not comfortable using online tools for financial advice.

"In an environment like this that is so erratic and volatile, offering real advice is so essential and face-to-face communication is so much more effective," he said.

Citi is more likely looking to find ways to save money than trying to enhance its offering, Prince said. "This isn't a cost-effective way to appeal to wealthier individuals," he said. "Online models have a relatively small audience. I am in favor of traditional blocking-and-tackling models. New paradigms don't work with wealthy individuals."

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