July 22, 2021

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J.P. Morgan executives on Thursday outlined plans to refocus on the cadre of traditional brokers at its J.P. Morgan Advisors unit and more than double its headcount to 1,000 from 450 advisors.

Hitting that target may take five to seven years, said Phil Sieg, who took over the Advisors business in April, and J.P. Morgan Wealth Management CEO Kristin Lemkau, although they declined to commit to a specific timeframe. The growth will come primarily from hiring laterals, including seasoned veterans and early stage advisors, as well as bringing on a couple dozen trainees and career changers per year into a new development program, the executives said.

“There is today a more declarative strategy and commitment to Phil’s business,” Lemkau told reporters about J.P. Morgan Advisors. “We’re going to grow but in the right way, and get to what we think is the right scale and operating leverage for this business.”

The growth impetus came directly from the top, Lemkau said, noting J.P. Morgan CEO Jamie Dimon is “serious” about growing the brokerage business. Dimon, a former head of Smith Barney whose father had been a broker in the Advisors unit, is scheduled to present the growth plan to the brokerage’s advisors at a Thursday night event that includes Sieg, Lemkau and a presentation by a Navy Seal.

The executives and a J.P. Morgan spokesperson declined to discuss what monetary investment J.P. Morgan would make in the unit or bonuses it would offer to entice seasoned brokers.

The J.P. Morgan Advisors unit is a small fraction of the bank’s much larger $673 billion-asset wealth management business, which also includes 4,000 advisors in bank branch offices and a self-directed platform. JPMorgan Chase also has a unit with over 2,500 private bank advisors globally that are not part of Lemkau’s division.

Headcount at the Advisors unit has also been stagnant despite some renewed attention in recent years. Sieg’s plan has echoes of a strategy his predecessor last year laid out, including a goal to hire 50 brokers annually as part of a make-over that included a name change for the unit, formerly known as J.P. Morgan Securities.

“We kind of flew under the radar for a while. I don’t know if that was good or bad. We just did,” Lemkau said. “We hired people, but it was mostly to replace the people who left. But I think people are now waking up to the fact that we’re serious.”

Phil Waxelbaum, a former brokerage executive and industry recruiter in Scottsdale, Arizona, threw cold water on the firm’s ability to hit the 1,000 mark without making an acquisition. A “ferocious” recruiting environment and the challenges associated with training make it unlikely that it could bring on the roughly 80 brokers net it would take to hit 550 in seven years and also compensate for attrition.

“It is impractical in five years to double a sales force through recruiting,” Waxelbaum said. “It’s never been done, and never will be done. No one can say they climbed this mountain.”

J.P. Morgan’s preference is to attempt to stick to recruiting and home-grown talent rather than resorting to acquisitions of existing brokerage firms, which come with a high price tag and additional costs associated with retention, according to a person familiar with the firm’s thinking who said the company has not closed the door to making a purchase.

Sieg, whose brother, Andy, is the head of Merrill Lynch Wealth Management’s roughly 14,000 brokers, also outlined plans to boost advisor support at the unit and improve its coordination with other parts of the bank.

The bank is establishing a “concierge” at several of the largest of the firm’s 21 offices who will be a point person for broker questions, helping them “troubleshoot” concerns or navigate the bank’s bureaucracy to meet clients’ needs, Sieg and Lemkau said.

“If they have a problem, instead of the advisor burning a lot of productivity time, we would rather have them talking to clients, and they would rather be talking to clients,” Lemkau said. “There’ll be sort of a troubleshooting team to help them.”

J.P. Morgan also has been piloting intra-bank customer referral programs. One of those programs, started in San Francisco and rolling out now to the New York area, makes it more financially attractive for bank branch-based advisors to share their larger clients with J.P. Morgan Advisor teams, Sieg said. Bank advisors can continue to collect revenue from the relationship even after a J.P. Morgan Advisor broker has taken the lead on the relationship.

Another program similarly encourages the bank’s investment bankers to send wealth management prospects to J.P. Morgan Advisors and vice versa, Lemkau said. The referrals had occurred previously, but there was little formality in place in terms of regular meetings and other processes.

It has also been staffing up its practice management and strategist bench, including bringing on former Merrill private wealth executive Mollie Colavita to take on Sieg’s former role as head of practice management at the Wealth division.

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