Citigroup Asset Management

Abstract

This story offers students the opportunity to practice systems thinking, including the analysis of behavior over time graphs, the application of systems archetypes, and the design of system interventions. Excerpt UVA-OM-1218 The Story Prior to attending Darden, I worked in the Equity Research department of Citigroup Asset Management for a year-and-a-half. This department had been in existence for just over a year when I joined, and because it was a cost center, senior managers had very high expectations regarding the impact of the department on Citigroup's various portfolio management teams. The department's managing director had promised the head of the entire asset management division that the group would initiate coverage on 1,500 global companies within three years. Consequently, the performance goal of each analyst was to initiate coverage on 10 companies per year, but a limiting factor made this goal very difficult to achieve. After analysts initiated coverage on companies, they continuously analyzed and reported all new developments relating to these companies. This maintenance function became so time consuming that most analysts found it difficult to initiate on new companies once they were already formally covering 8 to 12 other companies. The Strategic Decision In the mid-1990s, Citigroup Asset Management (then known as Citibank Global Asset Management) was a division of Citigroup (at that point in time, Citibank). Despite having access to the resources of a Fortune 25, financial services firm, the division was a midtier performer (or worse) in the competitive asset-management business. Managers within the company knew that profitability lay in attracting institutional and private banking business (institutional clients were pension funds and other corporate clients and the private bank catered to high net-worth individuals). Still, managers wondered how could they both build the Citigroup brand name in the asset-management business and attract new clients. Historic performance of the mutual funds and private portfolios was not spectacular and would therefore not generate the business required. . . .