JPMorgan asset management unit hits $3.7B in revenue

The asset and wealth management division reported increased revenue and growth in AUM following moves to scale the business amid the market volatility

The asset and wealth management unit at J.P. Morgan Chase saw third-quarter revenue increase 5% year-over-year, to $3.7 billion, as the bank continues to make moves to ramp up this side of its business, according to its earnings call Tuesday.

Chief financial officer Jennifer Piepszak attributed the increase in revenue to higher deposit and loan balances. Deposit balances increased 23% year-over-year to $171 billion, while loan balances were up 13% year-over-year to $170 billion.

Moreover, assets under management were up 16% year-over-year, clocking in at $2.6 trillion, while client assets hit $3.5 trillion, a 15% increase year-over-year.

J.P. Morgan’s increases in revenue, AUM and client assets come on the heels of recent announcements by the company about scaling the business amid the current market volatility.

Last Tuesday, J.P. Morgan Asset Management announced a partnership with fintech 55ip to allow advisers to transition clients into J.P. Morgan model portfolios using 55ip’s automated tax technology, which employs algorithms to offer tax-smart investment strategies, asset transfers, withdrawals and portfolio management.

The partnership will allow advisers to access 10 diversified multi-asset models run by J.P. Morgan, according to Ted Dimig, head of U.S. advisory and Core Beta Solutions at J.P. Morgan Asset Management.

“The technology put forward by 55ip will also enable advisers to access both tax transition technology, ongoing rebalancing, and various ways to ultimately trade,” Dimig said. “What’s really attractive to us in that structure is that advisers will be able to personalize those based upon different clients.”

Currently, only RIAs can access 55ip’s technology but J.P. Morgan plans to make it available early 2021 to additional channels, according to the announcement. RIAs who are interested can access the tool through 55ip’s landing page and there’s a specific icon that will take advisers to the J.P. Morgan model portfolio experience, Dimig said.

“Model portfolios are one of the biggest trends happening in wealth management today,” said Paul Gamble, 55ip CEO. “But taxes have proven to be a very large barrier for advisers to have broader usage of models and specific usage for taxable accounts.”

Advisers who already use 55ip have doubled the assets in their taxable accounts and have an average account balance that’s three to six times the industry average, Gamble said.

“Advisers are unlocking larger accounts for their taxable accounts and tax-deferred accounts,” he said. “We can help them monitor and trade those on an ongoing basis.”

In addition to J.P. Morgan’s recent tech partnership, the bank’s wealth management division announced in September it will hire hundreds of advisers across the country over the next two years in an ambitious move that’s aimed to bolster its digital-advice business model.

The initiative will be spearheaded by recent hire Boaz Lahovitsky, the former head of Vanguard’s Personal Advisor Services, JPMorgan announced in August. Boaz will lead the newly minted national branch, which is meant to serve target investors whose needs fall between the capabilities of a branch-based adviser and JPMorgan’s robo-adviser, You Invest.

The bank’s wealth management division has 3,500 branches and 21 offices across the country.