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Citi is kicking the commission habit for its remaining brokerageÂ customers.
The big bank says it is shifting away from charging commissions on customer trades and going towards a more customer friendly, fee-only business model. The change applies to investment advisors working out of Citibank branches.
Earlier this year, Citi entered into a joint venture with Morgan Stanley, which took over the day-to-day operation of its once mighty Smith Barney wealth management business. That venture largely already operates on a fee-only business.
The move away from commissions is a welcome one. And it should avoid situations in which brokers try to drum-up needless trading activity in customer accounts–simply to generated higher revenues.
By contrast, fee-only brokers generally charge a flat fee to customers based on the dollar value of the assets they have invested.