JPMorgan Wealth Thrived in Q3, Despite Advisor Attrition
JPMorgan Chase reported Thursday that its asset and wealth management division reported record quarterly profit and revenue in the three months ending Sept. 30, with more than half the revenue provided by the unit’s wealth businesses.
The biggest U.S. bank company by assets and deposits said net income at the division jumped 21% from a year earlier to $674 million while revenue was up 6% to $3.2 billion. JPMorgan does not break out how much the brokers in its wealth management business contribute but said that wealth businesses as a whole represented 51% of the division’s revenue.
JPMorgan has reorganized its brokerage and private banking business and stratified customers by assets in the past year, creating dissension among some veteran brokers inherited from Bear Stearns and in-house private bankers. Merrill Lynch, Morgan Stanley, UBS and Wells Fargo have each recruited million-dollar revenue teams from JPMorgan Securities in recent months, and last week HighTower Advisors announced that it hired a private banker credited with helping to oversee $500 million of customer assets.
A JPMorgan Securities spokesman said the firm does not discuss net increases or decreases in its advisory force not specify its number of financial advisors.
The bank’s asset and wealth division is the third smallest of its four divisions but its 29% return on equity far outpaced the ROE of 19%, 13% and 17% in its respective consumer and community banking, corporate and investment banking and commercial banking divisions.
Pretax margin in the asset and wealth unit increased to a fat 33% from 29% in the third quarter of 2016, and client assets in the division rose 9% to a record $2.7 trillion, the bank company said.
The division is coheaded by wealth and investment management chief Barry Sommers, a former Bear Stearns private client executive, and asset management boss Brian Carlin. Kelly Coffey, chief executive of JPMorgan’s U.S. private bank, reports to Sommers.
JPMorgan Chase as a whole beat analysts’ consensus earnings forecast on the back of stronger-than-expected results in its consumer/community banking and corporate and investment banking divisions. The bank’s massive fixed income, currencies and commodities business within the corporate and investment bank missed expectations as a result of what the bank said was continued low volatility and tighter credit spreads in the quarter.
Chase and Citigroup, denuded of the retail brokerage business sold to Morgan Stanley, opened the quarterly earnings season for financial institutions on Thursday. Wirehouses Merrill Lynch and Wells Fargo Advisors will disclose some of their quarterly metrics on Friday as part of earnings releases from their parent bank companies. Morgan Stanley, whose wealth businesses comprise about half of its parent’s revenue, is scheduled to report its earnings on Tuesday, Oct. 19.