J.P. Morgan Announces Hiring Freeze (**now watch advisors slip out the back door)

J.P. Morgan announced a hiring freeze today amidst the market downturn, expected economic difficulties, and coronavirus pandemic. We expect more global investment banks to follow suit.

Per media reports:

”Citing people familiar with the matter, Bloomberg reported that corporate and investment banking, consumer and asset- and wealth-management groups have been asked by the bank to review job postings and pull listings for roles that aren’t immediately needed.”

“The hiring restrictions come as JPMorgan and other financial institutions face a confluence of pandemic-caused conflicting events: a global economic shutdown that has made financial markets more volatile than at any time in history, damaged portfolios and returns, created extreme economic uncertainty and strained internal resources.“

Ok, fine. So hiring is put on hiatus and the bank is closing ranks as asset prices across the board have taken a beating. But J.P. Morgan has a bigger problem…

In conversations with recruiters and advisors at the firm, once the financial waters smooth out a bit, the amount of attrition expected from JPM Securities is substantial.

Some sources we spoke to think up to a third of the JPMS advisors could bolt for rival firms. Why? The talk of moving the platform to the private bank, depressed payouts, and ‘integration’ units taking accounts away from advisors with zero recourse – that’s why.

“We simply aren’t valued here in any meaningful way. We aren’t invested in either. They see us as simply part of the machine, rather than anything else… pushing JPM product as a near first and last resort.” – said an advisor actively in talks with rival firms.

A hiring freeze across the entire bank is a cool headline, but the reality of mass advisor attrition is worth noting as well.

In Message To Merrill Advisors Andy Sieg Just Makes Things Worse; “Should we attend prospect/new household meetings in haz mat suits…”

In a message to advisors, Andy Sieg took to the quarantined airwaves and sought to calm advisor concerns over team grids, payouts, and bank based bogeys that the firm put in place more than three years ago. In the midst of the bull market, Bank of America foisted all manner of ‘team-based’ incentive and penalty programs that sought to keep advisors at Merrill as well as increase fee based revenue, largely coming from bank based products.

Mr. Sieg sought to calm concerns but if largely backfired. Instead of easing concerns over payouts and policies that directly affect compensation, those fans were flamed and advisors have taken to discussing how a ‘band-aid on a bullet wound’ was just another failure of leadership.

So what did Mr. Sieg actually announce – and what did he not announce that could have been meaningful to advisors?

What was announced is a delay in evaluating team grids based on advisors having at least 30% of their client household accounts in targeted banking, trust and advisory programs by midyear to qualify for enhanced “team grid” payouts – pushing it instead to the end of the year. A six month reprieve largely leaving teams with their current payouts and avoiding any penalties of any kind. In other words, if an advisor hadn’t hit the bogey yet we aren’t going to hammer your payout in the midst of the corona virus pandemic. Thanks.

But what wasn’t announced is what has Merrill advisors talking and pissed off? There are other comp grid policies and punishments that weren’t given the time of day, nor has there been any discussion of pushing those back whatsoever. What about accounts that fall under the ‘zero payout’ threshold based on assets held at the firm. The severe downdraft in the markets has presumably had a meaningful impact on certain accounts and may cause advisors to receive zero income from those accounts based on their movement into this category. Mr. Sieg had nothing to say about this policy.

An even bigger issue is the penalty that Merrill advisors will be hit with should they not achieve household asset and account bogeys set by the firm at the beginning of each year. They are tasked with growing household numbers as well as overall assets to achieve maximum velocity on the firms comp grid. As it stands now advisors will still be tasked with hitting those ‘pre-pandemic’ quotas and hit with severe payout penalties if they fail to do so.

Clearly asset values have been hit, and hit hard – the discontinuing of policies that will destroy advisor payout connected to both assets values as well as asset growth should be suspended for the remainder of the year. Period.

Our guess is that Mr. Sieg and his downstream executives will wait as long as they possibly can to make any above changes that they purposefully chose not to this past week. The firm/bank is addicted to new assets and doing all they can to tie those assets to bank products as quickly as possible. Shutting down the penalties (they like to sell them as incentives) for not bringing in new assets and cozying them up to the bank will remain until it is basically untenable. Sad but true.


Wells Fargo Continues Aggressive Recruiting Push Amidst Quarantines And Bear Market; Recruiters And Advisors Comment

Wells Fargo recruiters and management have made a clear choice about the current state of wealth management amidst the coronavirus outbreak and market downturn – see this as an opportunity, rather than an obstacle. In conversations with recruiters and recruits alike it is clear that Wells Fargo wants to come out of this from a real position of recruiting strength, potentially landing more advisors and teams than was in their pipeline before the crisis began.

A talking point that we picked up on from multiple sources is this – the firm sees this crisis much like the financial mess that unfolded in 2008/2009. There was incredible movement from one firm to another during the months and year that followed, and Wells Fargo wants to be in position to take unique advantage of that same phenomenon. In fact,they believe that is exactly how it will unfold. Advisors will fill the need to ‘recapitalize’ in some way; and that way is usually handled via recruiting bonuses of scale.

Wells Fargo managers and recruiters have been tasked with reaching out to contacts during quarantine as they are generally more available and not hampered by the confines of their current branch and peering eye and listening ears. The conversations can be had at anytime as schedules are more open and advisors and actively planning the ‘what to do now’ phase of their careers. Wells Fargo brass believes that capitalizing on current levels of fear will pay big dividends in recruiting.

One recruiter that we spoke to had this to say about Wells and their strategy, “…it is very, very active out here right now. And Wells remains a major player. Not only do they have one of, if not the biggest, deal on the street, but the add on of retiring at the firm pushes any deal beyond the 500% level. So huge. If advisors are looking at books and revenue that have taken a 20% hit – an extra 200% on top of a +300% deal should fit just right. That is what Wells Fargo is selling. Pushing during this crisis and remaining constantly available as advisors schedules are free of in-person and in-office appointment… smart.”

Another recruiter took another track on the WF push, “Yes, they are being aggressive and keeping it up during this whole ordeal. But it is a 50/50 kind of thing. Some advisors may be turned off by it if the local manager doesn’t handle it with some level of care and empathy. It is one thing to lob lots of calls into a prospect – but a better idea would be to send gifts or written corrospondence that gives off the assumption of empathy. If, on the whole, WF gets that right, yeah they will come out of this as a winner.”

A current Wells Fargo recruit that we spoke with had this to say about their current process, “…they’ve been the most active in staying in touch as this thing has unfolded. Not in an annoying way, but just promising that nothing has materially changed on their end and that the process continues. That has been reassuring as I was a little concerned that this may stunt the process overall, but they’ve stepped up and made sure that I shouldn’t worry about it. Once this passes (coronavirus, market downturn) I know I’ve got options.”

If Wells Fargo does believe that this looks a lot like 2008/09 then they’ve made the right choice to lean in to recruiting and stay ‘top of mind’ with their best targets. It will pay off in the second half of this year, but probably more so in 2021. Being proactive in the midst of chaos has always been a counter-intuitive strategy for the bold.

EXCLUSIVE: JP Morgan Creates ‘Integration’ Unit Demanding Advisors Move Large Accounts To Private Bank; Advisors Have Zero Input In Account Distribution

When JP Morgan announced that it was moving to integrate its JP Morgan Securities unit into the Private Bank several eyebrows were raised. Those eyebrows were directed at issues such as payout and overall comp as opposed to decision making with HNW and UHNW accounts.

BrokerChalk has learned, based on conversations with several JP Morgan Securities sources, that a nefarious process has emerged that aims to snatch large accounts from advisors and move them to the private bank – with zero input from the advisors themselves.

As the process was described to us, JP Morgan Securities Advisors we’re asked to fill out forms giving significant detail to accounts they held that were larger than $5M. Not only the assets held in the account, but the annual revenue produced by the accounts and other key metrics. Once that activity was completed those clients were approached by a division in the bank known as JP Morgan Integration. That unit made it known to accounts larger than $5M that their assets would now be held at the JP Morgan Private Bank, and be taken away from JP Morgan Securities and their advisor. **Readers Digest version: JP Morgan is stealing accounts from advisors at their corporate discretion.

You can imagine the alarm bells that are going off with some of the largest JPMS advisors across the country. Many are scrambling in talks with recruiters to find a suitable competitor to transition to as quickly as possible. Working for a firm that will steal accounts from you at any moment, and frankly, go directly to the client to do so is incredibly disturbing.

One advisor we spoke with at JPMS had this to say:

“The process here is really, really shady. It was sold to more than a third of us that we were being tabbed to create a new ‘elite’ division, not unlike Merrill’s PWM group. Instead, once we finished reporting on our larger accounts, I got reports of clients getting emails from a JP Morgan ‘integration’ unit letting them know that their account was being moved to the Private Bank. Stunning.”

”What I am left with is a million questions. If the bank can indiscriminately take accounts from me how in the hell do I trust them with anything else? It’s impossible. Totally impossible.”

We’ve heard plenty of stories of JP Morgan being the worst offender when it comes to pushing proprietary product and being miles away from the execution of even a ‘best interest’ standard. In other words, institutional arrogance. But taking it this far, stealing the largest accounts from advisors in one of its divisions? And doing so by going directly to the client? Insane.

You can expect the exodus of larger advisors and teams at JPMS to accelerate over the next 3-6 months. Asking advisors to fill out stat sheets on their biggest clients so the bank can kidnap them – wow, just wow.

BREAKING: UBS Evacuates 36th Floor At 555 California Street In San Francisco; Confirmed Coronavirus Case

In the same building that a confirmed coronavirus victim was found to be working at Wells Fargo five days ago; it has now been confirmed that an investment banker at UBS has been diagnosed with COVID-19 and quarantined. As a result, earlier today UBS evacuated its investment banking division operations on the 36th Floor at 555 California Street in the heart of the financial district in San Francisco.

Per a memo circulated by Dianna Rosenblatt (seen by BrokerChalk and circulated by building management at 555 California Street) the case was confirmed to be COVID-19 on the 36th Floor of the building. That floor houses operations for both UBS and Morgan Stanley. Based on confirming anonymous sources from the building itself and staffers, we can confirm that the coronavirus case was specific to an investment banker at UBS, and their offices were evacuated today.

We cannot confirm if Morgan Stanley evacuated their offices as well, given that they were on the same floor and received the same memo from building management. We are chasing down that information and their reaction to a second case of coronavirus in the same building.

We have also reached out to Goldman Sachs and Merrill Lynch for comment and whether or not they have made any decisions to evacuate staff in light of the same memo from 555 California Street management.

This makes five cases across global financial institutions in the past five days (that have been reported) here in the US. It is remarkable that two of those cases were found in the same building in San Francisco.

We’d imagine that both the corporate responses as well as ‘disinfecting’ efforts at 555 California Street are in overdrive at the moment. The coronavirus seems to be spreading at that specific building at the moment.


Merrill Lynch Erosion: A Failure Of Leadership And Performance Under Andy Sieg

Merrill Lynch is a shell of its former self. Very few in the industry believe otherwise. As a division of Bank of America (a smaller profit center division at that) Merrill has seen most metrics trend decidedly south over the course of the last three years under Mr. Sieg’s direction.

Let’s do a little math. Over the past three years Merrill Lynch has either led the industry in the loss of client assets or placed second (only to Wells Fargo in 2018). And through 45 days of 2020 they have an enormous lead in the same category.

Tenured advisors continue to flee the firm in numbers previously unheard of in the industry. And not just ‘average’ advisors, but most departures ring the bell as some of the largest teams in their city and even their region.

So what to say of Mr. Sieg’s tenure other than it’s been a disaster? Sure, the amount of $1M and $5M dollar advisors is up across the firm – but has anyone been watching the markets?? If you did nothing other than watch the S&P and NASDAQ tick up for the past 4 years, you’d be able to claim higher productivity as well.

Losing assets has to be the metric that matters. Those assets are directly tied to clients, lending, and other investment banking products. When they walk the rest of Merrill, and by extension BofA, is less profitable than they could have been.

One of two dynamics are at work here at Merrill under Mr. Sieg’s leadership: either BofA gives nearly zero fucks about performance at his division, or he’s closer to being shown the door than most realize. You simply can’t preside over those terrible shrinking numbers year after year and make it out alive.

Count us as in the camp of he’s not going to last appreciably longer. At some point BofA leadership will pull the plug. A little closer look at the math? Under Sieg’s leadership over the past three years+, Merrill Lynch has lost $100B in client assets. Wow.

REPORT: Wells Fargo Adds Another Coronavirus Victim; This Time In Charlotte

The coronavirus continues to spread through the wealth management industry – claiming another Wells Fargo victim, this time in Charlotte, North Carolina. As the headline picture shows, a haz-mat team was employed to come to the facility and do a serious deep clean sweep, and evacuate the inhabitants during the sweep.

We’ve yet to indentify the patient, but we’ve been told that it is a staffer at the One Wells Fargo Center – the location of Wells Fargo’s east coast operations. As the name of the building states, a large portion of the building itself if staffed with Wells Fargo employees of all divisions. Having a confirmed case of the virus itself in that building is serious.

As the number of confirmed cases continues to mount, wealth management organizations should consider mandatory work from home policies for a period of time. The close quarters nature of these offices feels like a breeding ground for the transmission of the virus itself. In fact, another case of the virus was just found, via Bloomberg at RBC in Manhattan:

“The employee works in the investment banking division of RBC Capital Markets at the Brookfield Place complex in lower Manhattan, said RBC spokeswoman Sanam Heidary. The worker, who tested positive on Monday, and colleagues in close contact with the person are in self-quarantine.”

“Upon learning of the case, we took a number of immediate steps to protect the health and safety of our employees,” Heidary said in an emailed statement. “As a precautionary measure, we immediately advised employees who work on the same floor to work from home while we undertook a deep clean of the impacted floor and all common areas.”

“It’s the third known coronavirus case for Royal Bank, after two employees at a suburban office west of Toronto were confirmed as having the virus. Those workers have been self-quarantined, and the company told their colleagues on the same floor to stay home until further notice. The Toronto-based bank also disinfected the affected floor and all common areas, including elevators, the cafeteria and washrooms.”

We’ve also had initial reports of another firm and case in California, but have yet to get the info confirmed by a secondary source. Stay tuned as we follow the spread of the virus across wealth management.

New Coronavirus Case: Merrill Lynch Source Discloses Firm Has Identified NYC Infection

The coronavirus continues to dominate headlines across the globe and on Wall Street. Today is no different as we’ve continued to field coronavirus tips from across the wealth management community.

Earlier today we received a tip that a staffer at Merrill Lynch had received a confirmed coronavirus diagnosis in New York City. We’ve taken most of the day to chase down secondary confirmation of the info we received and finally were able to do so.

The Merrill Lynch staffer (not an advisor) had traveled abroad recently and had voluntarily gone to get tested based on that fact. The diagnosis came back positive late yesterday, and we were made aware of it early this morning. We were also given the location of the new coronavirus case.

**A quick word about our coverage of the coronavirus in the wealth management space. We are aware that naming the *specific* location of each case has led to a bit of panic – given the close quarters that are brokerage offices. That being said, we are adjusting our coverage of exact locations and being a bit more generic.**

This latest entry of coronavirus into wealth management has been confirmed in NYC and was found in one of the firms largest mid-town offices. The specific location is being omitted on purpose to respect the communication process of Bank of America and Merrill Lynch.

Still, this makes a trifecta of wirehouses now having confirmed cases of what the WHO now calls a pandemic. Only UBS has yet to announce a case of coronavirus. Wells Fargo, Morgan Stanley, and now Merrill Lynch.


SOURCE: Morgan Stanley Wealth Management Coronavirus Case In New York City; Purchase And Penn Plaza Locations Cited

In a tip just received moments ago, and confirmed in subsequent anonymous conversations, a Morgan Stanley employee has been diagnosed with the coronavirus. We have yet to finalize if the cited case is an advisor or another staff member, but we do know that it is in their wealth management division – and we have been told that the individual spent time last week in both Purchase, NY and 1 Pennsylvania Plaza locations.

Our initial source said the following, “You didn’t here this from me, but last night a formal diagnosis was made and I heard about it via text. No communication has gone out from management here (at One Penn) or from corporate, but I expect they are preparing something. Late last week there were rumors of someone, or even several, cases of the virus in this location, but nothing was confirmed. This morning was told at least one case has been confirmed.”

A second source followed up, “…what you heard is real. Confirmed case and diagnosis at MS, One Penn. Stay safe out there.”

Just yesterday a confirmed case found its way to the west coast and Wells Fargo. Now we have a coronavirus case on the east coast, at Morgan Stanley, in the financial capital of the world. Here is a quick reminder of what Sequoia said in a widely read memo, about the potential effects of the coronavirus just last week:

“It will take considerable time — perhaps several quarters — before we can be confident that the virus has been contained. It will take even longer for the global economy to recover its footing. Some of you may experience softening demand; some of you may face supply challenges. While The Fed and other central banks can cut interest rates, monetary policy may prove a blunt tool in alleviating the economic ramifications of a global health crisis.”

The Fed, markets, demand, interest rates – all of it is of little interest when the person you may have shared lunch with the other day has just been diagnosed. It puts certain day-to-day issues into perspective and forces corporate policy makers to act swiftly.


RESPONSE: Wells Fargo Staff Adds Context To San Francisco Coronavirus Patient And Policies

The Wells Fargo Advisors coronavirus case made its way to national news yesterday and continues to reverberate across the industry. In fact, there are still tips making their way into our texts and inbox regarding further actions at the financial district location in San Francisco. Goldman Sachs and Morgan Stanley have forwarded statements to advisors and staff as of late yesterday with several options for personnel to avoid any sort of undue panic.

In the midst of the news that we posted around 1AM yesterday, we received a communication from Wells Fargo and their corporate communications team. In the interest of full disclosure we are going to post that communication below, unedited:

“Good morning – I saw your article reporting about a Wells Fargo employee at 555 California Street.  I’d like to provide you with the facts via our statement.”

“On Saturday, March 7, Wells Fargo was informed by the San Francisco Department of Public Health (SFDPH) that an employee working on the 23rd floor at 555 California Street in San Francisco has tested positive for COVID-19. The employee is at home while their health is being closely monitored by their doctor and public health authorities. We wish our colleague a full and speedy recovery and will provide our full support.”

“Our first priority remains keeping Wells Fargo employees and customers safe and well-informed. After being notified that the employee had prolonged, close contact with an individual with a confirmed case of COVID-19, we performed enhanced cleaning at the location and asked employees who work on the floor to work from home on Friday, March 6. Following guidance from the SFDPH, we have asked all employees who were in prolonged, close contact with the individual to not come into the office for the next 14 days. With the location now thoroughly cleaned and identified employees not coming into the office for 14 days, the location will resume normal operations on Monday, March 9. This situation does not impact other Wells Fargo locations in San Francisco.”

“We continue to follow all public health guidance, and we remain focused on meeting the needs of our customers while reducing the risk to our employees and customers.”

Our sourced reporting was confirmed not only by Wells Fargo, but across financial media, Bloomberg, CNBC, TheStreet, etc. We will have more shortly in regards to further reporting on the coronavirus ‘on the ground’ across wealth management. Stay tuned.