J.P. Morgan Advisor Count and Wealth Revenue Inch Up
J.P. Morgan Chase & Co.’s wealth advisory force inched up in the third quarter while its wealth management profit margin grew steadily from a year ago and from this year’s second quarter.
The unit’s total net revenue was up 5% from a year ago and 4% from the second quarter at $3.74 billion as higher deposit and loan balances, higher management fees and brokerage activity offset net interest revenue that fell 1% and 4%, respectively. The asset management and wealth unit also released $51 million from its provision for credit losses even as its consumer and retail bank division added $794 million to its credit reserves.
JPMorgan ended the third quarter with 2,968 “client advisors” across its private banking, traditional J.P. Morgan Securities brokerage and in-branch wealth management businesses—up a net 99 since June 30 and 96 from a year earlier.
The advisors cover a wide spectrum of client wealth, and the majority are private bankers who are paid with salary-and-bonus rather than the revenue-based grid percentage of traditional brokers. The bank, which is losing a large private banking team in Atlanta, according to sources, does not break out the population of its different wealth sectors.
Despite the economic effects of the pandemic, and expectations of deteriorating credit in the second half of 2020 as credit remediation efforts subside, JP Morgan Chairman and Chief Executive Jamie Dimon said clients will continue to demand the bank’s services across the board.
“We’re adding private bankers and asset managers,” he said on a call with analysts and investors. “We just keep on growing.”
He also said he’s open to growing the asset and wealth business through acquisition.
Within the Asset and Wealth division, wealth management revenue climbed 3% from the third quarter of 2019 to $1.8 billion on higher market values and new assets, but was down 1% from three months earlier. (Asset management revenue was up 6% and 8% from the year-earlier and sequential quarters to $1.9 billion.)
J.P. Morgan did not break out expenses for the businesses, but said total noninterest expense for the asset and wealth division was flat with a year earlier and up 5% from this year’s second quarter aat $2.6 billion.
The pretax margin ratio at wealth management, however, soared to 33% from 19% in the second quarter and from 25% a year earlier. (The asset management margin was 30%, up from 25% a year ago and 24% in this year’s second quarter.)
J.P. Morgan at the start of 2020 merged its various wealth units into a single U.S. Wealth Management group in an attempt to build market share among the very wealthy through tighter management.