The brokerage arm of mega-bank JPMorgan Chase has been courting financial advisors at Wall Street competitors by calling itself a “small boutique.”
About 200 brokers from competing firms including Morgan Stanley, Merrill, UBS, Barclays Plc's Barclays Wealth, Deutsche Bank and others have reportedly joined JPMorgan Securities in the three years since JPMorgan Chase took over Bear Stearns and inherited a private-client business catering to high net worth customers.
Which is not terribly surprising, recruiter Richard Lipstein tells eFinancialCareers, if one considers that the Bear Stearns franchise JPMorgan Chase conquered three years ago always had a more entrepreneurial culture than the wirehouses at large.
Lipstein, a managing director of Boyden Global Executive Search in New York, says beyond that, JPMorgan Chase, which has what he considers “the most successful private bank” geared to those with over $25 million to invest, is now segmenting between different types of well-heeled clients.
Other recruiters, citing wealth management advisors they have placed, confirm that JPMorgan Securities has maintained Bear's high-end strategy and small-firm intimacy.
Providing advice to individual investors via stock brokers is a relatively new feature of JPMorgan Chase’s wealth management business. JPMorgan Chase is already one of the world's largest private bankers to the ultra-rich. According to Reuters, the push makes the company a big competitor for the same top financial advisors coveted by Morgan Stanley, Bank of America/Merrill Lynch and UBS.
The unit ended 2011 with 439 financial advisors and expects to add up to 75 more this year and to reach 650 over by 2016, says Greg Quental, who was appointed JPMorgan Securities' CEO in August 2010.
"We're seeing interest from advisers across a range of organizations," Quental is quoted as saying, noting that recent struggles at rival firms have created an opportunity for JPMorgan Chase to recruit and expand.
He calls the unit a boutique—albeit “a boutique plugged into a massive financial institution," according to Quental, a former Bear Stearns strategy executive.
Is that pushing it, for a bank that is the largest in the United States by assets and employs 260,000 people? Not so much, says Lipstein, if you consider that Merrill has 16,100 financial advisors and Morgan Stanley has 17,600.
If JPMorgan Chase reaches its long-term goal of 1,000 brokers, it will exceed Deutsche Bank’s private banking operation, the recruiter says, but will still be one of the smaller operations out there and will also be attached to one of the most prestigious banking organizations anywhere, one that was perhaps “the most unscathed” during the financial crisis, Lipstein says.
Meanwhile, Quental says JPMorgan Securities has just three layers: brokers, branch managers and himself. Rivals may have division, regional and branch-complex managers between brokers and the top boss.
The CEO maintains that JPMorgan Chase brokers are among the most productive on Wall Street, Quental said, generating revenue at an average of more than $1.1 million each last year.
JPMorgan Chase now has three businesses selling wealth management services:
- Its private bank caters to families with more than $25 million to invest,
- JPMorgan Private Wealth Management requires at least $5 million, and:
- The new unit—JP Morgan Securities—is a traditional brokerage that trades stocks, bonds ad other investments on commission, although it also manages portfolios for a fee.