(Dow Jones) The change in strategy for Citigroup Inc.'s wealth management group will start to get reflected in advisors' paychecks next month.

Deborah McWhinney, the head of personal banking and wealth management, announced the move to a new fee-based model in early October. It becomes a reality in January, when the unit's roughly 600 financial advisors start getting significantly less compensation for transaction-based business.

Transaction-based business, for which brokers had been compensated on a sliding scale, now will be paid out at a flat 25% for individual advisors and 35% for those on "approved" teams that meet certain criteria, brokers said.

But for fee-based business, the brokers can take home up to 57% of fees charged to their clients, using a sliding "credit schedule"--the greater the fees and total assets, the higher the rate they take home. Clients will be charged fees of about 1% of invested assets.

The plan is designed to encourage advisors to do more fee-based business, and Citi plans to gradually phase out all transaction-based compensation, although it hasn't specified when. Until now, payouts didn't differ so drastically based on the type of business.

Advisors with lower production are seeing the more severe cuts. Those with less than $500,000 in annual production will get a flat payout of 25% on all business, transaction and fee-based. By teaming up, advisors can avoid falling below the cut-off, so the change will encourage some to seek partners. Some others, however, will likely be pushed out.

Some advisors are also facing a loss of revenue because if their clients move to fee-based accounts, they typically move to institutional share-class mutual funds, which would cause brokers lose any trailing fees on funds they've already sold clients.

Yet there are many advisors already working with only fee-based accounts, and they stand to benefit from these changes.

In a bid to limit attrition, and give advisors time to adjust, the bank is guaranteeing advisors 90% of their 2009 pay in cash and 10% in deferred compensation for 2010, if they are on an "approved team."

Speaking privately, advisors say they find consolation in the 2010 pay guarantee, but worry about what will come in 2011. They speculate their payout on transaction-based business will be reduced to nothing then, and that there will be no set floor on how low their pay can go.

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