These "Wealth Managers" Cost Citigroup $15 Million

From Citigroup Settles A BellSouth Case in today's Wall Street Journal (subscription):

According to the NASD, in 1994 to 2002, Smith Barney financial advisers in Charlotte, N.C., held more than 40 seminars with BellSouth employees, told them they could afford to retire early by cashing out of and reinvesting their pensions and 401(k)s. The advisers told them to expect 12% annual returns, and that they would be able to withdraw about 9% each year.

The NASD also found the brokers put the employees into investments that exposed them to much greater market risk than they would have faced had they stayed in their employer-sponsored accounts.

Coincidentally, yesterday's WSJ reports on Citigroup's new pilot project for melding the marketing of banking and investment services:

In Boston, Citigroup is overhauling operations and corporate culture in a city where computers don't talk to each other and bankers who have spent years coddling wealthy clients can be reluctant to share them with colleagues. Last fall, Citigroup opened its first retail branches in the city, joining the bank's force of Smith Barney brokers who have been there for some 50 years.

A financial adviser from Citigroup's Smith Barney brokerage unit now sits in each retail branch in Boston. Elsewhere, financial advisers are teaming up with colleagues in other parts of the bank's sprawling network to pitch more products to clients.

At a meeting to help launch the project, a Citigroup manager noted that Boston was the site of a famous Tea Party. Will this revolutionary heritage help Bostonians deal with in-branch brokers?