NEW YORK, June 12 (Reuters) - Citigroup's new head of wealth, Andy Sieg, further reshuffled his leadership team on Wednesday and reiterated financial targets as the bank seeks to attract more of its clients' investment assets.

During his first public investor conference since joining Citi in September, Sieg acknowledged the wealth unit's lackluster returns and restated profit targets set by CEO Jane Fraser.

The wealth division aims to boost returns to above 20% in the medium term, Sieg said, versus 4.6% in the first quarter. Expenses were expected to fall in the near term, he added.

"Investors are, and should be, very disappointed about the returns in this business and so I don't think it should surprise anybody that we needed to drive significant change across the team," Sieg said in response to a question about the leadership changes.

"We have had a substantial number of departures, but those departures really come through a level of rigorous self-examination of the business," he added.

Kris Bitterly was tapped to run Wealth at Work, a business that serves clients through their employers, according to a memo seen by Reuters.

Sieg also hired Keith Glenfield, with whom he worked closely at Merrill Lynch Wealth Management, to succeed Bitterly as head of investment solutions when she takes on her new role in September.

"It is time for a laser-like focus on winning our clients' investment assets," to expand beyond their traditional banking and lending needs, Sieg wrote in the memo.

The lender estimates clients have $5 trillion in assets invested with other banks or asset managers.

The wealth division poses the biggest challenge for Citi to improve its operational performance and shift its mix of businesses to reduce its reliance on lending, Bank of America analysts led by Ebrahim Poonawala wrote in a note last week.

"Management will need to make the case for how Citigroup can effectively compete against industry behemoths such as UBS and HSBC when comparing to global banks and the likes of Morgan Stanley, JPMorgan and Bank of America in the U.S.," Poonawala wrote.

If the turnaround is not successful, the bank may consider strategic alternatives for the division, he added.

Bitterly, who currently leads investment solutions, will succeed Joe Ryan, who is running the Wealth at Work business on an interim basis after the departure of Naz Vahid was announced last month.

Sieg also hired Dawn Nordberg from Morgan Stanley to lead integrated client engagement, it announced last week. The new wealth function is intended to boost collaboration, including with the company's banking unit led by Viswas Raghavan, who started earlier this month.

Investors have rewarded Fraser with a 17% boost in Citi's share price this year as she carried out a sweeping overhaul, outpacing an 11% gain for a broader S&P index of bank stocks.

Still, she faces major challenges to catch up with rivals, including regulatory problems, lackluster earnings and a workforce unsettled by thousands of layoffs. (Reporting by Tatiana Bautzer; Editing by Lananh Nguyen and Lisa Shumaker)