- JPMorgan has been building out its new US wealth management division for nearly a year.
- Its efforts are being led by Kristin Lemkau, a longtime marketing executive there now tasked with beefing up the bank’s wealth operations.
- Lemkau is steering the business at a highly competitive moment, with rivals like Goldman Sachs and Citibank looking to double down on their wealth management operations, too.
- The division has already made hires from within and outside the firm for leadership roles, with plans to ramp up advisor hiring and its program for advisor training, she told Business Insider.
- Lemkau is also looking to improve diversity within its advisor ranks, a goal most firms are renewing this year. Earlier this year, the bank disclosed that less than 5% of its advisors are Black.
- Visit Business Insider’s homepage for more stories.
JPMorgan’s vision for building out a bigger, better wealth management business is in Kristin Lemkau’s hands.
Lemkau, a two-decade JPMorgan veteran who was previously its chief marketing officer, was tapped to run the reorganized wealth division late last year with some $500 billion in client assets. She has been laying the groundwork with new hires, aggressive plans to add advisors and new digital capabilities, and ambitions to catch up to the largest wealth managers that have dwarfed it.
The bank already has an unrivaled base of customers. You know the name (probably because of Lemkau’s work). Now it’s trying to keep those customers for longer as lucrative wealth management clients.
In a recent interview with Business Insider, Lemkau noted the firm’s customer base of some 62 million households, with 40 million using its mobile app. JPMorgan, the largest US bank by total assets and by total deposits, is among the biggest mortgage and auto lenders.
The same dominance in the consumer space has not been so for wealth management, in part because its disparate offerings managed under different umbrellas were not marketed in a cohesive way.
“The opportunity for us is to put those pieces together in a really compelling way, where we can also be primary investment partner, not just primary bank or primary credit card,” she said over a Zoom call.
Lemkau is steering the business at a particularly competitive moment, with many rivals looking to double down on their wealth management operations, too, attracted to the relatively little capital required to run wealth businesses and the steady, recurring nature of clients’ advisor fees. Meanwhile, newer wealth-tech startups are adding to the competition.
In her first press interview as chief executive of what has been re-named JPMorgan Wealth Management, Lemkau shared new details on strategy for growing her division, advisor diversity, its training program, and hiring plans.
Plans to significantly grow its advisor base
The four largest wealth managers, known as the wirehouses — Morgan Stanley, UBS, Wells Fargo, and Bank of America via its Merrill Lynch business — manage hundreds of billions of dollars more than JPMorgan does for affluent clients who, technically speaking, are not rich enough for private banking services.
That’s through their massive forces of financial advisors, like Morgan Stanley’s 15,500 and Wells Fargo’s 12,900.
JPMorgan’s wealth division has around 4,000 — a mix of advisors in its Chase branches, those in its newly created National Branch business, and full-service financial advisors within JPMorgan Advisors (the rebranded name of former JPMorgan Securities) who typically cater to wealthier clients. The firm’s elite private bank has remained a separate entity, outside of Lemkau’s division.
The re-brand Lemkau introduced was finalized internally on Monday.
“The math is simple,” she wrote in a memo to employees. “With one unified brand instead of three, we can concentrate our efforts to make more people aware that they can invest with us. This is more than just a name change. It represents the significant investments we’re making to improve the products, technology, and service we offer to our clients, and how we’ll make sure they know about it.”
Lemkau’s overarching strategy for growing its offerings includes “digitizing the client experience, digitizing the advisor experience, and frankly, just hiring a lot more advisors,” she told Business Insider.
Reuters
To that end, the wealth division has made some notable hires in recent months, including a large financial advisor team in the Bay Area last week poached from Merrill Lynch, led by Gwen Campbell.
Lemkau is setting her sights on hiring in the major US wealth centers — cities including Chicago, New York, Miami, Los Angeles, and Boston — as well as other markets.
Lemkau is considering adding as many as 4,000 advisors across all of its advisor units, or roughly doubling its base, over five to six years.
“It’s a business where people can go get big checks anywhere. We’re going to be competitive on that front, if not better, but we want to make sure that people are coming here because they actually believe in the growth and the mission,” Lemkau said, adding she’s willing to pay for top talent.
The spokesperson also declined to elaborate on compensation incentives for luring experienced advisors from rivals.
Leaning into a new type of advice
This summer, JPMorgan hired Boaz Lahovitsky, a former Vanguard executive who led its robo-advisor, as head of its newly formed branch-based wealth unit where salaried advisors will be responsible for helping clients remotely through digital channels, including video.
It was a bid to boost remote-based advice for customers who want to opt-in for that type of service, and is in the spirit of offerings from rivals like Fidelity, Vanguard, and Charles Schwab. The unit, called the National Branch business, will fully roll out next year once hiring those advisors ramps up.
“It’s clear that that’s what we need to build. It’s clear that consumers, even pre-COVID, were moving to much more of a video-based, on-demand preference for everything, from how they consume media, to how they have different experiences. That’s only going to accelerate,” she said, adding she met with Lahovitsky the day prior in New York (“on opposite sides of an office, with masks on”).
“I think there’s an opportunity to fill that not only for just remote-based advice, but for our existing full-service advisors, as well,” Lemkau said.
The next generation of advisors, and improving diversity
Part of Lemkau’s plans include shaking up the way it trains up advisors under Phil Sieg, a longtime Merrill Lynch Wealth Management executive who joined in the spring and whose brother, Andy Sieg, runs that business.
Bringing up the next generation of advisors is crucial for the industry, where more advisors are retiring than entering. JPMorgan has an existing advisor development program, and part of Sieg’s role is beefing up methods of training for the growing business. The firm has had several hundred people going through the multi-year program.
Pedro Fiúza/NurPhoto via Getty Images
Its main wirehouse rivals have rigorous, multi-year training programs with relatively low graduation rates and thousands of novice advisors in each.
Merrill, for its part, has focused in recent years almost entirely on training up new advisors as opposed to poaching experienced advisors from competitors.
Like competitors, JPMorgan sees its advisor trainee program as a valuable pipeline for talent that is more diverse in race and gender than its advisor force has been historically. Lemkau has a focus on increasing diversity within her advisor ranks, a goal most firms are renewing this year.
Earlier this month, JPMorgan said it would invest $30 billion in various initiatives over the next five years aimed at promoting racial and ethnic equity in the US. Lemkau has her own goals for diversifying her workforce, though a spokesperson declined to elaborate.
In January, the bank disclosed to Congressional Democrats that less than 5% of its advisors are Black in response to inquiries over a New York Times report that detailed racism in some of its Arizona bank branches.
Competitors’ figures around financial advisor diversity are in most cases just as dismal, if not worse, and firms have pledged to improve.
“This has to be looked at and treated as a critical business initiative, not just part of HR’s agenda,” Lemkau said.
JPMorgan Wealth Management is also bringing over Jeanne Sun, a JPMorgan veteran and managing director, into the division’s newly created post of general manager of inclusive investing. She is joining later this year.
Sun will be responsible for initiatives including developing investment products geared toward under-represented groups, linking the wealth division with firm-wide diversity programs, according to a company memo.
“There’s a huge chunk of the population who is just not advised. And that’s the big opportunity for me, and why I feel so passionately about it,” Lemkau said. “I think it’s an extraordinary revenue opportunity, as well as the right thing to do for the country when you’ve got wealth gaps between people of color and white people, and men and women.”
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