J.P. Morgan adds hundreds of financial advisors as profits slip

The war in Ukraine and worsening inflation raising fears of a recession didn’t leave any time on J.P. Morgan Chase’s first-quarter earnings call for CEO Jamie Dimon to discuss the company’s substantial financial advisor recruiting gains.

The firm’s private bank and J.P. Morgan Wealth Management added more than a combined 650 registered representatives on a net basis over the past year — a notable haul that marks at least the third quarter in a row that has seen more than 500 new advisors join the company. Understandably, though, the analysts who spoke with Dimon on a call after the megabank reported its earnings on April 13 focused primarily on the potential threat of a recession.

Dimon reminded them that he “can't forecast the future any more than anyone else” and that “everyone's wrong all the time,” according to a transcript by investing website The Motley Fool. Some aspects of the “very strong underlying growth” of the economy are “not stoppable,” Dimon told them, citing the strength of businesses and credit and $2 trillion he said that consumers have in their savings and checking accounts. On the other hand, there are “two other very large countervailing factors” with the inflation and Russia’s invasion of Ukraine, he said.

“Wars have unpredictable outcomes. You've already seen it in oil markets. The oil markets are precarious,” Dimon said. “That's another huge cloud on the horizon, and we're prepared for it. We understand it. I can't tell you the outcome of it. I hope those things all disappear and go away, we have a soft landing and the war is resolved. OK? I just wouldn't bet on all that. Being a risk manager, we're going to get through all that. We're going to serve our clients, and we're going to gain share. We're going to come to that earning tremendous returns on capital like we have in the past.”

The bank caught a jittery Wall Street by surprise by putting $900 million aside to be ready for the worst, on top of the more than $5 billion in reserves it freed up last year in case of potential loan losses during the pandemic, The Wall Street Journal reported. Its stock price slumped after the earnings, adding to its declines during the recent equity volatility.

However, the metrics most important to financial advisors and other wealth management professionals looked far rosier. For coverage of the firm’s fourth-quarter earnings, click here. To see the main takeaways from J.P. Morgan’s first-quarter earnings, scroll down our slideshow.

Note: The firm doesn’t break out specific wealth management metrics across its organization, which includes the Global Private Bank in its Asset & Wealth Management division and J.P. Morgan Wealth Management in the Consumer & Community Banking segment.

Wealth management advisors and client assets

Across Chase branch-based teams, online investing and J.P. Morgan Advisors, the number of client advisors jumped by 7%, or a net 316 registered representatives, from the year-ago period to 4,816 in the first quarter. Client investment assets climbed by 9% to $696.32 billion.

Private bank advisors and clients assets

At the Global Private Bank, the headcount of client advisors surged by 14% year over year, or a net 336 reps, to 2,798. Driven by net inflows, assets under management in the private bank rose 8% to $777 billion and total client assets increased 13% to $1.88 trillion.


Wealth management revenue and earnings

The Consumer & Business Banking division’s revenue grew 8% year over year to $6.06 billion due to rising deposits and client investment assets, according to the firm. Margin compressions in bank accounts partially offset those gains. Revenue for the total unit, which also includes home and auto lending and credit cards, ticked down 2% to $12.23 billion. Net income for the unit tumbled down by 57% to $2.90 billion after the impact of a credit reserve the company released and recorded last year.


Private bank revenue and earnings

Private bank revenue expanded by 6% to $2 billion, the same percentage increase for the overall Wealth & Asset Management unit. The segment enlarged its revenue as a result of taking in more deposits and management and performance fees, although shrinking deposit margins and the equity volatility canceled out some of the increasing business. The unit’s expenses soared by 11% year over year to $2.86 billion in the first quarter, with part of the hike attributable to investments in the business, compensation, volume-related costs and distribution fees. Net income dropped 20% to $1.01 billion after the additional expense.


Remark

“We remain optimistic on the economy, at least for the short term — consumer and business balance sheets as well as consumer spending remain at healthy levels — but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine,” Dimon said in a statement. “Our focus this quarter remained on helping our clients navigate difficult markets and unpredictable events, which included working with governments to implement economic sanctions of unprecedented complexity. While our company will continue to deal with this global turmoil, our hearts go out to the extreme suffering of the Ukrainian people and to all of those affected by the war.”


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