In case you haven’t noticed - JPMorgan has been in the news a bit over the last few months. A quick denouement on that particular statement. It is my OPINION that JPMorgan is what it has always been; a nearly best of its class global bank, investment bank and financial services firm. Unless you actually work at the DOJ, it is abundantly clear that an axe is clearly being sharpened on behalf of JPMorgan with the intent of swinging it again and again. (I wonder why the same “axe to grind” treatment is not being given to Government Sachs...errr...Goldman Sachs?)
So wither JPMorgan Securities. It is my opinion that JPMorgan Securities is the biggest sleeping giant in the world of wealth management. Let’s take the next few minutes to discuss why and how that has come about. Let’s give particular attention to the business model with which they are operating in, where they have come from, the consolidation that created JPMS and where they are headed.
- Business model. Throughout the financial crisis JPMorgan was “the city on a hill” amongst global banks and investment banks. Coming through the subprime mortgage crisis nearly unscathed. In fact, Treasury used JPM as a soft landing for the failing IB formerly known as Bear Sterns. In other words, JPM has/had an absolutely sterling reputation - while being led by everybody’s favorite CEO Jamie Dimon. Inside of this juggernaut was a little known business unit known as JPMorgan Securities. With limited FA’s and limited resources, it moved along at a measured pace hoping to capitalize on the reputation of the mother ship. A firm, within a firm, was the model. To some degree it still is.
- Evolution. The purchase/acquisition of Bear Sterns led to a proliferation of branch locations and newly minted JPMS advisors across the country. Inside JPMorgan the integration of legacy Bear Sterns, legacy JPMS as well as the banks “private client” group would take considerable time. By 2012 JPMS had consolidated nicely the Bear Sterns folks and begun operating on its own. Two years ago there were at least three different business units that could be considered “wealth management” specific. Today there is one. JPMS has come of age as a HNW and UHNW organization.
- Today. As it stands, JPMS is operating profitably and winning its share of recruiting battles amongst the likes of the four wirehouses. Each quarter a profitable drip of recruiting and NNM flows out of the business unit. Clearly the strength of the brand name, product availability and platform continues to play a part in the growth story. While JPMS continues to carve out its niche in the HNW and UHNW space, it works to find a balance between standing on its own two feet while appropriately leveraging the strength and size of the global power that is JPMorgan. So far, so good.
So here is where my personal opinion takes center stage.....JPMorgan Securities is a sleeping giant! The brand name, the global platform, the infinitely defined product portfolio, etc. - JPMorgan Securities is possibly on the cusp of becoming a much bigger player. What is keeping it from becoming that - I don’t know. But I promise you that the Ivy League MBA’s that litter the board rooms and hallways of JPMorgan are getting closer and closer to figuring it out. WATCH OUT!
Andrew Parish is the CEO and founder of AdvisorHUB and managing director of Axiom Consulting.