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A hundred billion dollars isn't cool. You know what's cool? A trillion dollars.
Twelve zeroes comprise the central motivation behind JPMorgan's new plan, announced Monday at the bank's investor day. The banking juggernaut plans to bring on 1,300 advisors to its wealth management division over the next three years, as the unit marches toward $1 trillion in assets under management.
Take it to the Bank
It's been a gloomy start to the year for JPMorgan. In January, CFO Jeremy Barnum cautioned the bank could miss its targets in the next one to two years due to macroeconomic headwinds and rising costs. The dire warning was followed by shareholders' first-ever rejection of an executive bonus package for CEO Jamie Dimon and his top lieutenants, signaling growing discontent with his stewardship of the bank's future. But Monday's meeting seemed to quell some of those concerns, and the bank now believes it could hit its key performance targets for the year after all.
The good news included the announcement of a hiring spree aimed at filling out its Asset & Wealth Management unit. Long one of the two smaller of the bank's four key pillars, the division has lagged in revenue far behind Consumer & Community and Corporate & Investment Banking. Yet it's an increasingly attractive sector, and earning a 1% cut in perpetuity on $1 trillion is more than reason enough for the bank to increase its wealth management footprint:
- The 1,300 new advisors would bring the team's total headcount to 6,000, Jennifer Piepszak, co-CEO of the consumer banking unit, said Monday. That includes the 1,100 advisors the unit has added since 2017.
- The division has roughly $700 billion in assets under management, the bank said in an April press release.
Wealth Makes Health: The unit generated $4.3 billion in net revenue in Q12022, up 6% year-over-year -- quite the contrast with the more-than-lackluster 5% year-over-year decline in the firm's total revenue for the same period. It seems that wealth management is a valuable asset these days, and not just for JPMorgan. Wells Fargo saw its wealth management division's numbers jump 6% in the latest quarter, even as its overall results saw a 5% dip. Bank of America saw actual, albeit slim, revenue growth overall to start the year -- in large part thanks to record revenue of $5.5 billion at Merrill Lynch, a division of BofA. With the economy in flux, it's no wonder the world's wealthiest are looking for more and more financial advice -- high fees and other strings attached notwithstanding.