What’s in JPMorgan’s playbook to expand its wealth unit?

JPMorgan wants a bigger slice of a $50 trillion market.

The bank is plotting a major wealth management expansion, bolstered by a hiring spree, new leadership, big digital investments and possibly acquisitions.

“To date, we’ve been very successful with some of the largest clients in the world. But the future is very different,” Asset & Wealth Management CEO Mary Callahan Erdoes said during the bank’s recent investor day presentation.

JPMorgan, which recently reorganized its wealth management operations, laid out where it sees new growth opportunities — and how it plans to seize them.

Like other big U.S. banks, JPMorgan is betting on wealth management delivered to a wide client base through a mixture of human and digital advice. The firm wants to capture greater wallet share from its existing client base by offering a range of investment and banking services.

On the digital side, the bank has an online investing platform, You Invest, which was launched last year. About 90% of clients using You Invest are first-time investors with JPMorgan. The firm is planning for digital innovation and it has the budget to make it happen: JPMorgan is spending $1 billion annually on tech investments, including on AI and machine learning, according to the bank.

“As much as we think everyone wants to do it all from their home on their iPhone, it eventually becomes complicated enough that you want to talk to someone,” Erdoes said of clients’ investing needs.

To ensure clients do have someone to talk to, the bank intends to grow its existing brokerage force of approximately 3,700 U.S.-based financial advisors. A spokeswoman declined to specify whether JPMorgan has a specific headcount target, but the firm’s investor presentation highlighted key geographic areas for growth, primarily in the Eastern U.S.

Erdoes pointed to the estimated 22 million high-net-worth individuals with $1 million to $10 million as one of JPMorgan Chase's nearest opportunities for growth. Approximately half of those individuals are already banking with JPMorgan Chase — yet only 5% use JPMorgan for managing investments.

“We still have 95% to make in roads to. And when we add investments to what we do with clients, then on average the deposits double and the overall share of their wallet triples,” Erdoes said. “If we added just another 5%, it would be another $2 billion in revenue for this firm.”

Erdoes also praised Kristin Lemkau, who took over in December as head of the firm’s reorganized wealth management unit. Erdoes said she has the right background to lead the business, having worked in both the Chase and JPMorgan arms of the bank. In January, Lemkau unveiled leadership changes within wealth management, making several key appointments.

M&A

With E-Trade deal, it’s Morgan Stanley for the masses

The acquisition is the latest demonstration of firms merging banking, wealth management and digital services to meet clients' every financial need.

By Andrew Welsch

February 20

JPMorgan’s playbook shares similarities with its largest rivals. For example, Bank of America has assembled a platform to serve a range of investors, from mass affluent to ultrawealthy, via its Merrill Edge and Merrill Lynch businesses.

Morgan Stanley is buying E-Trade, adding a massive online brokerage to its 15,000-strong advisor force. Morgan Stanley also stands to gain a sizable digital banking operation and stock plan administration business, which it hopes will generate millions of client referrals for its wealth management operations.