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BIGGEST LOSERS! The Biggest Names In Banking And Wealth Management Are Getting Crushed

You would think that name recognition and brand value would still hold some sort of sway in this industry. The numbers tell a different story altogether.

The biggest losers when it comes to high-level talent in wealth management are some of the biggest names banking and wealth management has ever seen: J. P. Morgan, Merrill Lynch, and Morgan Stanley. All of them are taking historic talent losses and client assets are following them out the back door.

But it isn’t all about the headline. Each of those firms is ‘losing’ for very different reasons. Let’s deconstruct the dynamics of each firm.

1. J. P. Morgan – compensation and culture are the big problem here. UBS has decided to exploit those pain points for headliner Managing Directors across the country at JPM. It has worked flawlessly. Yes, recruiting deals and ongoing compensation are leading the conversation; but culture and JPM leadership being completely unable to stem the tide is a bigger issue. Outlook – systemic issues with no end in sight.

2. Merrill Lynch – a slow bleed connected to a cancerous host that is Bank of America. They changed the name to ‘Merrill’ and loaded up advisors with bank products. Every meaningful team that remains at ML is either in discussions to leave or has signed retirement deal paperwork and grinning and bearing it. Outlook – the thundering herd has been slaughtered.

3. Morgan Stanley – this story is very different than the two above. MS attrition is just that; a function of industry churn at the biggest firm on the street. Taking a closer look,
Morgan Stanley has recruited just as many teams and client assets as they’ve lost so far this year. This isn’t a culture problem or a management problem; rather an industry problem. Outlook – current talent drain will slow.

These firms are as high profile as they come and it’s a great study in culture. The way they are responding to the talent losses is very, very telling. BofA/Merrill just doesn’t seem to care, which projects institutional malaise and that the division is not integral to the larger entities’ success. JPM has no idea how to deal with what is going on at the Private Bank; which proves institutional arrogance (and incompetence). Morgan Stanley is dealing with losses by aggressively recruiting from its competitors, proving that the current trend at that firm will subside.

Three biggest losers, three different narratives, three different outcomes.

Departures From J. P. Morgan Private Bank Continue Unabated; Denver And Philadelphia Bankers Find Greener Pastures

The numbers have moved beyond eye-popping at this point. It is no longer an anomaly or ‘normal attrition’ as described in a moment of cognitive dissonance from J. P. Morgan Private Bank’s leadership. We’ve reached levels that should be described as a mass exodus.

More than 10 teams, 50 bankers, and $60B in client assets have left J. P. Morgan (largely for UBS) in the past 7 months. And the pace isn’t slowing. Consider this – there are still large money center cities that have yet to see a J. P. Morgan private banker or team exit. Houston, Chicago, and New York City come to mind. As we hear it, that could change.

The latest moves come from Denver and Philadelphia. Bankers that have spent their entire careers at JPM moved to City National and Cresset.

In Denver, Kevin McGuire chose to join Cresset after a 90-day garden leave. He is joined by Sarah Burney and Jake Schwinn, who will start in August, and Dan Biondi, starting in July.

In Philadelphia, Matthew Salvitti, Tim Pippet, and David Elliott joined City National in June. Their respective careers spanned nearly 40 years at J. P. Morgan Private Bank. They were specifically interested in City National as it is shepherded by Kelly Coffey, former CEO of the J. P. Morgan Private Bank in 2018.

The theme here is that the best and the brightest are leaving the Private Banking ranks. And this is with only one meaningful competitor offering significant upgrades in the comp and recruiting bonuses.

Should Morgan Stanley or Rockefeller enter the fray – the private banking exodus would further accelerate. We hear that both of those firms are seriously discussing doing just that.

J. P. Morgan Private Bank To Hold Conference Call This Week; To Discuss Retaining Top Talent (LOL)

In a conversation with a current and prominent J. P. Morgan Private Banker, several internal strategies for dealing with the current exodus were shared with us. To describe those strategies as ‘underwhelming’ would be exceptionally kind. It’s as if J. P. Morgan Private Bank leadership has never faced any actual ‘live bullets’ by way of competition.

To be more clear – they have no idea what they are doing.

Two strategies that were shared with us seemed so weak that we couldn’t believe them until they were explained even further: a conference call this week to discuss retaining top talent and 10% salary increases for top analysts (that was widely panned by the actual analysts).

To better understand the conference call later this week to ‘retain top talent’ – let’s break it down. This is a call by management at JPM PB to discuss WITH top talent how they’d like to be retained. This is how far behind the curve JPM PB leaders are. Nearly two months after massive teams in Dallas and San Francisco walked away from the firm (as well as Atlanta, Miami, NJ, CT, LA, etc etc) management is hosting a call to ask “well what do you guys think”. Omg! We expect a guy like Josh Navarro to have lots to say lol.

The other strategy had to do with paying lower-level employees at the Private Bank an extra $5k a year. Seriously? That’s an extra $400 a month, or about $280 after taxes. So not even enough for a decent meal once a month in most money center cities.

And you wonder why the mass exodus to UBS and Morgan Stanley isn’t about to slow down.

Remember we told you that David Frame (CEO of the Private Bank) is on the hot seat. That seat gets warmer by the day when the best he’s got is conference calls and “we promise to pay you more, trust us (but we won’t put it in writing).”

Just an FYI – when a JPM Private Banker moves to UBS they literally put the next 10-12 years of annual comp and bonuses in an actual contract. Not words, a contract. Read that again.

Rumor: David Frame, J. P. Morgan Private Bank CEO, Could Be Removed If Attrition Continues

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BREAKING: J. P. Morgan Private Bank Exodus Continues; Another $20M Team Bolts For UBS

The continued exodus of J. P. Morgan Private Bank employees isn’t showing any signs of slowing down. We’ve gone from monthly resignations of large-scale teams, to weekly at this point.

The latest team just ‘decamped’ from the Indianapolis JPM Private Bank location and the stats sound like a broken record. Information that was passed to us from inside JPM has a team with more than $20M in annual revenues and more than $6B in assets announcing their resignations to local management and signaling their intentions to join UBS once their garden leaves expire.

The team has requested to be left anonymous until their garden leaves finalize and a more formal announcement will be made. In conversations with UBS sources, the move was confirmed and the anonymity of the team was requested again. But know this, inside JPM everyone is acutely aware of the talent hitting the doors.

The larger narrative remains the same for UBS and J. P. Morgan Private Bank – it’s at once a ‘kid in a candy store’ and a bloodbath. We’ve heard from multiple other teams still in the due diligence process that chuckled at the raises offered to MDs to try and stem the tide. As the saying goes, when compared to what UBS is offering, it’s like ‘tripping over nickels.’Expect more announcements over the next 60-90 days, at which point UBS may be ‘full up’ on JPM Private Bankers.

JP Morgan Private Bank Source – “It’s chaos around here, nobody knows how to respond…”

Take a quick look at the latest numbers associated with transitions from one firm to another across the industry – it’s a bloodbath. J.P Morgan Private Bank and J.P.Morgan Securities are getting their collective teeth kicked in. The world’s most prominent bank is getting hammered week after week and month after month, with what looks like an accelerating pace at the moment.

Between UBS and Morgan Stanley, the predominant buyers of ‘banking’ teams in the wealth management space, JPM has lost more than $30B to UBS and another $5B to Morgan Stanley.

A couple of quotes were given to us by a current JPM private banker and a source at UBS that seems to sum up the current state of things at Jamie Dimon’s shop:

“It is chaos over here right now,” said our source at JPM, “they are trying to patch up gaping holes with the type of rhetoric usually reserved for therapy, and making monetary promises about end-of-year bonuses that aren’t attached to any guarantees or paperwork.”

“JPM management feels a lot like the end of the movie ‘Miracle’ right now”, said a source at UBS. “The US team coaches, as time wound down, couldn’t understand why the Russians weren’t pulling the goalie in the last minutes while trailing. Ultimately they realized that the Russian coaches and team were so shocked to be in a losing position that they didn’t know how to respond. That’s JPM Private Bank and their management right now, they have no idea what to do.”UBS in particular has found a silver bullet for landing private banking teams and the ‘asset transfer’ ledger is proof. They are leading all the recruiting ranking this year by a figure of nearly 4x the firm in the second position (Rockefeller).

So far JPM’s response financial response has been tepid at best. Rumor has it that senior bankers are getting promises of $100k increases in year-end bonuses and larger percentage-based salary bumps. That ain’t gonna get it, dude. The exodus will continue.

UBS Destroying Recruiting Rivals

NEW RECORD: UBS Destroying Recruiting Rivals; Adds More Than $30B In Net New Assets Through April

UBS has taken over the high-end wealth management recruiting market and is showing no signs of letting up. Through the first four months of 2021, ending in April, UBS has added more than $30B in client assets to the firm’s US wealth management operations. Everyone else is scrambling to figure out why and attempting to play catch up.

Somewhere, deep in the bunker that is the UBS recruiting department in Weehawken, NJ, a decision was made nearly a year ago to make two strategic pivots: value private bankers in the same way they value traditional advisors and remove all the hurdles from their traditional rivals deal. An explosion occurred.

Here is a short (but nowhere near all-inclusive) list of the biggest moves to UBS through 2021:

  1. J. P. Morgan Private Bank, Dallas $10B
  2. J. P. Morgan Private Bank, Los Angeles $6.5B
  3. J. P. Morgan Private Bank, Miami $5B
  4. J. P. Morgan Private Bank, Atlanta $9B
  5. Wells Fargo Private Bank, San Diego $2B
  6. BofA Private Bank, San Francisco $2B**a little math above, that’s already more than $30B. Wow.

This recruiting run is unprecedented. Historic. Never been done before. Ever. $30B in four months? There has never been a firm that has approached that number in 6 months across the history of wealth management recruiting.

For comparison’s sake, Rockefeller is currently having a banner year in recruiting with $10B in recruited AUM. So fully an entire 2/3 behind UBS. And if recruiting chatter is any indication, expect UBS’ success to continue.

As we’ve discussed in previous articles the keys to this surge have been the aggressive move into private banking and the removal of all hurdles for teams at firms like Merrill and Morgan Stanley. Other traditional rivals like Wells Fargo and Rockefeller continue to pitch asset/revenue matrix models with hurdles year over year. Effectively, UBS’ has brought a fully guaranteed deal to market.

The response?? The numbers don’t lie – it’s historic.

J. P. Morgan Private Bank Loses Another Team; Morgan Stanley Grabs $3B Group In Salt Lake City

Another week, another headline associated with a departure from J. P. Morgan Private Bank. David Frame, CEO of J. P. Morgan’s Private Bank, is having a really, really tough year.

The latest team to tell JPM to kick rocks hails from Salt Lake City, Utah. That effectively closes the loop on Private Bank departures across the country for JPM. Other departures have been announced in LA, Miami, Dallas, Atlanta, NYC – and stay tuned for the next three to four that aren’t far behind. You can bet your ass that David Frame and his management minions are having as many meetings as they can stand to figure out how to stop the bleeding.

The details of the Salt Lake City team that migrated to Morgan Stanley are as follows: Brian Swenson, Eric Smith, and Jesse Bohannon including staffers Melissa Sende and Charlotte Painter. They walked out with $3 billion in client assets, and have joined Morgan Stanley’s PWM division after their 90-day garden leave.

Over the past six months, if you are scoring at home, JPM is closing in on losing nearly $50B in client assets from the Private Bank. Again, executive leadership is in serious trouble. You can’t hemorrhage talent the way that’s been happening there without some level of accountability. Keep your eye on that dynamic as well.**a side note – we are chasing down the kind of deal Morgan Stanley is offering private bankers. We know what UBS is doing, but as of this print, Morgan Stanley is still offering private banking recruiting deals based on W-2 revenue. If that changes, you’ll be the first to know.

Whose Next? As Private Banking Recruiting Ramps Up Which Wirehouse Is Set To Benefit Next

The ranks of ‘private bankers’ at global investment banks like JP Morgan and Goldman Sachs have become some of the most sought after recruits in 2020. Their relative books of business have been dubbed more portable than previously believed and the market is beginning to reflect it.

We’ve previously discussed that UBS has been committed to and benefiting from recruiting ‘non-traditional’ teams in the past year, but we wonder, who’s next? What firm might be the next to jump into the fray and begin valuing these groups based on their stated revenue as opposed to their W2 personal income?

As of this post, we aren’t sure who it might be, but we think it makes sense for both Wells Fargo and Merrill Lynch (ML has dipped their toe into the private banking waters a bit already). Wells Fargo’s inclusion is obvious – they need the good press, momentum, and to replace the advisors that have walked away from the firm over the past two years.

And Merrill Lynch – it’s well documented that every headline associated with a team leaving BofA/ML isn’t a small fish. Big teams have been leaving ML for years. Adding outsized assets and revenue by way of private banking teams would serve the firm well.

No matter who it is, they aren’t getting anywhere until they begin to adjust their recruiting deals away from W2 income. Someone is going to catch up to UBS – let’s see who gets there first.

AP

Rumored JP Morgan Securities Protocol Exit Could Damage Practice Valuations, Complicate Transitions

In a move that may not surprise anyone (given the continuing consolidation of advisors inside the JP Morgan ecosystem), we are hearing that JP Morgan Securities is about to bow out of the broker protocol.

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