The Citi collapse appears to be a resounding echo of this lesson, but as usual, don't expect even it to be listened to.
By the time I got to know him, my mentor in this business of insurance journalism was already a curmudgeon. His name was John Cosgrove, and he took a good deal of ribbing in the newsroom among his younger cohorts for all those columns and editorials he wrote about the business, which could have been stored under the same headline: "There is nothing new under the sun."
The older I get, the more I agree--never more so than on the subject of so-called full financial services, which is rearing its head amidst the debris of the current financial cataclysm.
I've been observing this business now for five decades. In every single one of those decades, with regularity, the subject has appeared and disappeared under various guises. Call it what you will--full financial services, the financial supermarket, cafeteria plans, one-stop shopping--it's been with us for half a century at the very least, and without success.
Perhaps the most visible example in my lifetime was Sears' ill-fated experiment a few decades back to introduce financial services kiosks into its retail stores. First floor men's shirts, second floor ladies' dresses, third floor Coldwell Banker, Dean Witter and Allstate.
It didn't work then and it doesn't work now because the average Joe cares less about this kind of "convenience" than about trusted advisers for his real estate, investing and insurance needs.
It came as no surprise to me then to read this headline in The New York Times of January 14: "Citigroup Plans to Split Itself Up, Taking Apart the Financial Supermarket." The subheadline said: "Breaking Apart a Titan."
Over the past decade, of course, Citigroup, largely under the leadership of Sandy Weill, has amassed a financial services empire and became the ultimate embodiment of this movement. And now it, too, is spectacularly unraveling, in this instance to appease nervous regulators and investors shaken by the worst economy since the Great Depression.
In the insurance arena, Citigroup has already shed one of its early crown jewels, Travelers, and is now poised to spin off or sell another, Primerica, along with Smith Barney and a number of other holdings in consumer finance, credit cards, global asset management and illiquid mortgage-related assets.
And so it goes. Once again, and more grandly than ever, the notion of a financial supermarket crashes and burns. The whole idea has been a consistent failure for as long as I've been around this business. And if a behemoth such as Citigroup can't make a go of it, who can?
It's an idea whose time has come, and gone, over and over again. But if I had to wager, I'd say it'll be back.
THOMAS J. SLATTERY,
a writer on industry affairs, is managing director of Slattery-Esterkamp Communications, Baldwin, N.Y.
February 2, 2009
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