JPMorgan sees wealth management 'acceleration' from First Republic deal

JPMorgan Chase's acquisition of First Republic Bank earlier this month is bringing "meaningful acceleration" to the banking giant's increasing emphasis on its wealth management business.

That's what Jennifer Piepszak, the co-CEO of consumer and community banking at the Wall Street giant said Monday at the bank's investor day in New York. With its $10.6 billion acquisition of First Republic on May 1, JPMorgan added roughly 200 financial advisors to its ranks of roughly 5,000. It also brought an additional $200 billion in client assets to the $4.3 trillion that JPMorgan oversees in its asset and wealth management division.

JPMorgan has said it has a goal of eventually having at least 6,000 financial advisors. The wealth management industry has become a central concern for the banking giant and many of its competitors, which like the line of business because of the steady fees it generates.

JPMorgan has been at pains since the acquisition to stem the departures of former First Republic advisors leaving to take up positions elsewhere. Marianne Lake, Piepszak's co-CEO, said the outflows have slowed and that JPMorgan is working to provide the remaining former First Republic advisors clarity on their roles.

First Republic's private wealth-management business will become part of JPMorgan Advisors, which emerged from the bank's acquisition of the defunct Bear Stearns in 2008. JPMorgan also has plans to turn at least some of the 84 branches it obtained through its purchase of First Republic into so-called private client centers. These would be places specifically set aside for wealthy clients to meet with advisors.

Mary Callahan Erdoes, JPMorgan's CEO of asset and wealth management, said the First Republic acquisition brought expertise in several types of investment vehicles, including active exchange traded funds. Like all ETFs, these funds usually track indexes like the S&P 500. But unlike their passive cousins, active ETFs have a team of managers overseeing and directing their investment transactions.

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Erdoes said the acquisition also brought expertise in separately managed accounts and model portfolios, which are templates that advisors can follow to find the best options for clients with a large variety of different investment goals and financial circumstances.

She maintained that despite the recent departures of some former First Republica advisors, JPMorgan has shown over the years that it can retain top employees.

"Most of them don't leave," she said. "Over 95% stay here until they leave. We invest in them and they invest in us."

Python for everyone
One theme running through almost everything that JPMorgan officials discussed Monday was plans to use technologies like so-called artificial intelligence to make the bank run more efficiently and at a lower cost. Erdoes said all new hires are receiving training in the Python programming language — which can be used to build websites and software — "whether you like it or not." Python is used mainly for data analysis and data visualization and to develop websites and software.

She said the goal is to make sure employees have at least a basic understanding of the technology that will fuel much of what JPMorgan does in the future. The firm is already taking client and other data it has amassed over more than 30 years and feeding it into artifical intelligence and other systems.

"We then match that with the millions of data points we get every single day," Erdoes said. "That's what we say is such a tremendous uplift. And we have only begun to scratch the surface."