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Rating:Is B for Bad? Citi Execs Decide For Themselves Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, September 28, 2004

Is B for Bad? Citi Execs Decide For Themselves

Reported by Theresa Sim

With some fund firms eliminating B class shares and regulators cracking down on brokers who inappropriately sell the shares, one would almost think the "B" in "B class shares" stands, at the very least, for "bad."

One firm is trying a different approach: rather than banning B class share sales outright, Smith Barney has enlisted an algorithm to render the issue of "appropriateness" moot. Smith Barney advisors do not have the choice to recommend a specific share class to their clients, explained W. Thomas Matthews, president and chief executive officer of the Global Private Client Division of Smith Barney at Citigroup Global Markets at the Securities Industry Association sales and marketing conference in New York.

Instead, an algorithm calculates the appropriate share class for an investor in a given product depending on relevant factors. Although Matthews said that Smith Barney's financial consultants do not like the system, he said that the system was preferable to an outright ban of B class shares.

Currently 16 percent of the Smith Barney division's clients' assets are in mutual funds, said Matthews. 

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