JPMorgan Takes Down ADV for RIA Call Center Launch Led by Former Vanguard Group Call Center Manager with Direct Information on Who Manages Assets

White Shoe New York Wealth Manager Finally Delivers Mass Market Trust Advice From Phoenix Offices

Brooke’s note: How far can a big, high-end brand stretch to the low-end? JPMorgan is working to find out. It has already pushed the whitest shoe brand far down the curve to sometimes misbehaved retail stock brokers. See: The New York Times Exposing JPMorgan Brokers, Again. It also has a robot-advisor. Now he is setting up an RIA call center in Phoenix under his own brand that will once again push the boundaries of his brand extension mandate. Having an RIA to compete with your stock brokers seems like a solid decision. Using the former Vanguard call center boss to get him started also seems a good idea. But Vanguard had no secret formula. The Malvern Mammoth has reached $ 250 billion in assets by offering drastically inexpensive wealth management services and making its fees transparent and straightforward. JPMorgan, on the other hand, acts like, well, JPMorgan when it comes to pricing, so far. The advisory fee has yet to be disclosed and the number of investors who will be geared towards JPMorgan products looks like power steering based on some of the most chutzpah statements I’ve ever seen in an ADV : “In general, JP Morgan prefers JP Morgan managed strategies,” says the ADV. It then defines, transparently I guess, “prefers.” “JP Morgan expects the proportion of strategies managed by JP Morgan to be high (in fact, up to 100 percent).” Vanguard does not necessarily wear a halo. It also directs all assets to its index funds and ETFs, but it goes without saying that the more expensive Vanguard funds are cheap. Vanguard is set to add more expensive Vanguard active funds to the mix. No doubt JPMorgan takes note.

JP Morgan US Wealth Management has filed with the Securities and Exchange Commission (SEC) to become an RIA as it pursues the mass market with phone calls and Zoom.

Boaz Lahovitsky will head the US National of Wealth Management at JP Morgan.

The Corporate and Consumer Business division of JPMorgan Chase & Co., with $ 500 billion in assets under watch, formalized its intention with an ADV filing on November 1. Investors must bring a minimum of $ 25,000, depending on the record.

“Boaz is an important hire for us to execute on our growth strategy,” said Kristin Lemkau, CEO of US Wealth Management at JPMorgan Chase at the time.

“Boaz is a proven leader, thinker and exceptional innovator. He will be a great addition to our management team. “

Heavy product

The documents laid out part of JP Morgan’s strategy to bridge the large gap between its robo-advisor, You Invest, and its 4,000 brokers in 3,500 branches and 21 offices.

JPMorgan Chase CEO Jamie Dimon cast a shadow in June on his robo-consulting and self-direction firm’s “You Invest” platform.

“‘You Invest’ has raked in around $ 50 billion in assets, despite the fact that” we don’t even think it’s a great product yet, “he said according to the CNBC report.

Although SEC ADV lists the fees as zero, a spokeswoman for JP Morgan said the service will be chargeable, but that remains to be determined.

The RIA is filed as a “packing charge” of JP Morgan Securities LLC, and indeed, it will be charged with JPMorgan proprietary products, according to the ADV.

“In general, JP Morgan prefers strategies managed by JP Morgan,” he says.

“JP Morgan expects the proportion of strategies managed by JP Morgan to be high (in fact, up to 100%) in strategies such as, for example, cash and high quality fixed income, subject to applicable law and any account-specific considerations.

“JP Morgan may allocate a significant portion of the assets of the Program to the JP Morgan Funds. “

Ultimate conflict

The fact that JPMorgan is launching an RIA is a plus, but the way it’s structured is of concern, says Peter Mallouk, CEO of Creative Planning, a national RIA in Leawood, Kan, which has added tens of billions of new assets in a way. organic and by acquisition in 2021.

“I think any brokerage that adds an RIA, I consider it positive. I think it’s fantastic, ”he says. “I think these things are positive.”

Yet with his optimistic view comes a big caveat. “I also have trouble with [fiduciary] advisers who have exclusive products. The ultimate conflict with a customer is having a product that you recommend.

The pilot phase of the RIA call / video center will initially employ 100 Investment Adviser Representatives (IARs) in Phoenix.

“We have exceptional advisors in our branches and offices, but we are still in our early days of providing video and phone advice to clients who prefer to be served this way all of the time,” Lemkau said in a statement. ‘August 2020.


For now, this innovation will adhere closely to the Vanguard script.

Peter Mallouk: The ultimate conflict with a customer is having a product that you recommend.

JP Morgan’s first office will be in Phoenix where Vanguard has most of its call centers and will even use a surprisingly similar name: JP Morgan Personal Advisors Program.

Similar to Vanguard’s personal advisor services, which approached $ 250 billion in assets under management after its inception in 2015, JP Morgan’s service will dramatically increase revenue by prioritizing products from its own asset manager. .

One of the main draws of Vanguard’s RIA is its low commission of 30 basis points, excluding the underlying asset management fees. These underlying fees can be set for a big jump in high net worth accounts as the company adds active investments. See: After a freemium-style start, Vanguard Group prepares its $ 243 billion RIA as a profit engine with high octane, higher risk, higher margin proprietary funds tempered by a ” opt-in ”for investors

Prior to Vanguard, Lahovitsky held strategy, operations and managed account platform positions at UBS, Citigroup, Genpact and Booz Allen. At Vanguard, he was responsible for all of the leading financial advisors across the country and leading strategic initiatives in digital channels.

His skills will be needed to quickly develop the offer, according to the previous version.

JP Morgan plans to hire hundreds of advisors in multiple locations across the country over the next two years to assist clients remotely via video calls, phone and other digital channels, should a client choose this service. “, he indicates.

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