"Some of the recent developments in the investment consulting and money management industries, we believe, have presented us with an opportunity to take this business to the next level," said Mr. Carter.
For example, with Citigroup exiting the asset management business last year, the company organization no longer manufactures asset management products, so there is less of a perceived conflict that comes with housing investment advice and investment manufacturing under the same roof, he added.
Also, both Messrs. Carter and Hatch pointed to the Securities and Exchange Commission's recent investigation of "pay-to-play" conflicts of interest in pension consulting practices, and said the probe is serving as a catalyst for change in the industry.
The two-year investigation ended in December with regulators finding that only a few of the 24 firms formally examined needed to improve their disclosures and management of conflicts. The Citigroup executives said the investigation opened the door for other players in the consulting industry to draw new business.
"The smaller, independent consulting firms, for one, have attracted a significant amount of new business over the last year," said Mr. Carter.
Citigroup Institutional Consulting will position itself as a "bundled" consultant, one that can package together other institutional products and services along with its investment consulting capabilities. CIC will offer institutional investors other services that the Citigroup organization provides, such as securities settlement and execution, corporate trust and securities lending.
For the next several months, Messrs. Hatch and Carter said Citigroup will focus on building the CIC group with internal staff.
Mr. Carter said he is evaluating some former Legg Mason employees acquired in December when Citigroup swapped its asset management business for Legg Mason's brokerage outfit. CIC could add several teams of former Legg Mason brokers to its consulting operation in the coming months.