Review of J.P. Morgan Wealth Management

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Updated on Wednesday, April 29, 2020

J.P. Morgan Securities, a division of the worldwide financial services behemoth J.P. Morgan Chase & Co., provides investment guidance and management for individuals and wealthy investors, as well as foundations, endowments, corporations and other business entities. The firm offers a myriad of services nationwide for novice as well as sophisticated investors, allowing clients to decide how involved they want to be in managing their accounts. The firm’s team includes more than 6,500 investment and advisory employees who handle nearly $163.4 billion assets under management (AUM).

All information included in this profile is accurate as of April 29, 2020. For more information, please consult J.P. Morgan Wealth Management’s website.

Assets under management: $163,396,095,133
Minimum investment: Varies by advisor, but typically ranges from $500 to $500,000 or $1 million, depending on the account
Fee structure: A percentage of AUM, with a maximum of 2% paid to J.P. Morgan Securities
Headquarters location:277 Park Avenue
New York, NY 10172
(800) 999-2000
jpmorgansecurities.com

financial advisor

Overview of J.P. Morgan Securities

J.P. Morgan Securities is the brand name for a wealth management business of J.P. Morgan Chase, a publicly traded financial services holding company with offices across more than 60 countries. With roots dating back to 1799, JP Morgan Chase operates businesses across many parts of the financial industry, including banking, asset management, securities brokerage and investment advisory services. It is a compilation of more than 1,200 predecessor institutions, including big names like The Chase Manhattan Bank, Bank One, Bear Stearns and Washington Mutual.

The division of J.P. Morgan Securities employs more than 6,500 investment advisors and researchers to manage more than $163.4 billion. Most of the firm’s financial advisors are employees of J.P. Morgan, as well as broker-dealer representatives and insurance agents. They offer their advisory services through J.P. Morgan as well as Chase Wealth Management.

Which types of clients does J.P. Morgan Securities serve?

J.P. Morgan Securities’ list of clients includes individuals as well as high net worth investors and families; trusts; estates; corporations and other business entities; foundations and endowments; charitable organizations; and pension and profit-sharing plans.

There is no across-the-board minimum investment required to establish a relationship with J.P. Morgan Securities. Instead, the requirement varies by account type and financial advisor. Certain managed strategies or portfolio managers require an investment of anywhere from $10,000 to $250,000, depending on the program. For example, a customized taxable or municipal bond portfolio strategy can require a minimum investment as large as $500,000 or $1 million. On the other end of the spectrum, a single asset class strategy invested largely in mutual funds and ETFs requires a minimum investment of just $10,000.

Services offered by J.P. Morgan Securities

Investment management and consulting services

As a registered investment advisor, J.P. Morgan Securities primarily provides investment management and consulting services. Clients can choose from a host of accounts, giving them the flexibility to determine their breadth of investment choices, as well as how involved they’d like to be in the day-to-day management of their account.

For example, the Portfolio Advisor and Horizon programs allow clients to manage their accounts themselves with guidance from professional financial advisors. On the opposite end of the spectrum, clients who prefer to hand over the day-to-day decision and trading responsibility to a professional also have many options, including the Portfolio Manager Program. Three-quarters of the firm’s assets under management are under a discretionary relationship, meaning the advisor does not need clients to approve each trade.

Clients have access to both affiliated and unaffiliated portfolio managers, as well as specific strategies, such as single or multiple asset classes including conservative, balanced or aggressive growth. In certain cases, clients will consult J.P. Morgan for recommendations for third-party portfolio managers, and then directly form a relationship with the outside portfolio managers.

Digital advisory services

Tech-savvy investors or those with smaller portfolios can opt for the firm’s digital advisory offering, a service provided entirely on its websites and mobile applications. Clients can choose a static portfolio or one that grows more conservative as you get older. Investments are limited to J.P. Morgan ETF investments, however.

Financial planning

As part of the portfolio management process, clients will discuss with their advisors their goals and objectives, such as retirement planning, and receive investment guidance to reach those objectives. J.P. Morgan Securities does not, however, offer a la carte financial planning services to non-account holders, such as creating written retirement plans.

Additional services

Separately, the firm is registered as a broker-dealer, allowing clients to place trades in their brokerage accounts and pay per trade. Most financial advisors at the firm are also licensed to sell annuities and life insurance.

The Private Bank division of J.P. Morgan provides additional services to individual investors, such as banking, lending, assistance with trusts and estates, business ownership, cross border wealth management, executive compensation issues, philanthropy and family office services.

Here is a full list of the services offered by J.P. Morgan Securities:

  • Investment advisory services/portfolio management (separately managed and wrap fee accounts; both discretionary and non-discretionary)
  • IRA and 401(k) rollovers
  • Insurance/risk management
  • Employee benefit plan fiduciary services/401(k) consulting/pension consulting
  • Brokerage services

How J.P. Morgan Securities invests your money

When clients enlist the firm’s financial advisors as their portfolio manager, the advisors will invest their funds according to their personal investment styles, as well as each client’s financial situation, risk tolerance and objectives.

Advisors create a custom account for clients that can include many asset classes, such as U.S. and international equity and fixed income securities; mutual funds; ETFs; limited partnerships and other pooled investment vehicles; derivatives; options; REITs; and cash. Advisors receive qualitative and quantitative research from divisions within the larger J.P. Morgan Chase universe, which provides information on investment opportunities and guides portfolio decisions.

Clients also can work with a financial advisor to recommend affiliated and unaffiliated portfolio managers and specific strategies. Those portfolio managers then make the decisions about how to invest client money. J.P. Morgan Securities regularly reviews the list of managers available in its programs and considers a variety of factors when deciding whether to use a manager.

There are a large number of specific strategies available in the program, including:

  • Customized taxable bond, municipal bond and preferreds portfolios
  • Managed equities
  • Fixed income
  • Conservative, balanced growth and aggressive growth

Clients who go the online account route will complete an investment questionnaire. A proprietary algorithm then determines their risk profile and portfolio construction.

Fees J.P. Morgan Securities charges for its services

Clients typically pay a flat fee, calculated as a percentage of assets under management. The fee varies by financial advisor as well as account type, with a maximum of 2% typically going to J.P. Morgan Securities. Certain accounts with a portfolio manager come with additional expenses that typically range up to 0.75% annually. The annual fee is typically paid in quarterly increments.

Most accounts are wrap accounts, meaning the flat fee includes investment management, trading costs and commissions, as long as J.P. Morgan is used to execute the trades. Clients will owe additional fees if other brokers are used, with costs often associated with fixed income and debt securities. In certain accounts, such as the Customized Bond Solutions, trading costs are not included. Clients still owe third-party fees, including mutual fund internal fees and expenses.

For a less expensive option, the firm’s online advisory program charges an annual fee of 0.35%. (It’s worth pointing out, however, that clients may be able to receive similar services for less money by buying a separate target date retirement fund, which are not subject to this flat advisory fee.)

Whether the per-trade brokerage account or the flat fee advisory program is better for a client depends on the cost per trade, how much trading occurs in the account and the length of time over which the client would like to receive investment advice.

J.P. Morgan Securities highlights

  • Modest accounts (sometimes) welcome: While many other financial advisors demand clients invest a set amount to establish a relationship, J.P. Morgan allows advisors to set their own minimums. Some J.P. Morgan advisors accept clients who lack six-figure investment funds. The J.P. Morgan Core Advisor Portfolio Program, for example, requires a minimum investment as low as $10,000, while the firm’s online option requires just $500 to get started.
  • Highly accessible: The firm provides registered advisory services from more than 5,000 offices around the country, giving it a large national footprint.
  • Flexible on client involvement: J.P. Morgan Securities allows clients to decide how involved they want to be in the management and decision-making of their account, with myriad options available.
  • Access to proprietary research: Financial advisors can tap internal research from other large J.P. Morgan divisions on mutual funds and other investments to help guide their recommendations.
  • National recognition: J.P. Morgan advisors have appeared on many best of lists published by various reputable organizations, such as the Financial Times, Barron’s and Forbes.

J.P. Morgan Securities downsides

  • No standardized fee schedule: Your fees will vary by advisor as well as by account, making it difficult to learn how much you’ll pay without meeting with each particular advisor and discussing your options. The maximum fee allowed is typically 2%. If your fees approach that maximum, you can probably find a less expensive alternative. The industry median is about 1.17%, according to RIA in a Box.
  • Not every advisor can offer every service: Only certain qualified advisors who meet specific requirements are allowed to directly manage client portfolios. Clients looking for that service will need to verify with each individual advisor that it’s offered.
  • Potential conflicts of interest: Most J.P. Morgan Securities advisors are dually registered as broker-dealers and also licensed insurance agents, meaning they can earn commissions when you buy certain products. Thus, they have a financial incentive to recommend certain products, creating a potential conflict of interest. The firm also stands to gain when advisors recommend J.P. Morgan affiliated products.
  • No standalone financial planning services: The firm focuses on portfolio and investment management. Its online services in particular are not meant to serve as a complete financial plan or cover all topics.
  • Outside brokers often cost more: Trades are typically placed through J.P. Morgan brokerage unless, for example, a portfolio manager chooses or is required by law to do otherwise. Thus, clients may receive less favorable trade pricing than would be obtained if they used other broker-dealers. (If trades are placed with another broker-dealer besides J.P. Morgan, clients usually owe trading and commission fees.)
  • Long list of disciplinary disclosures: J.P. Morgan Securities has a record of disclosures. See more below.

J.P. Morgan Securities disciplinary disclosures

Registered investment advisors must report to the SEC on their Form ADV if the firm or its employees have faced material legal or disciplinary action in the last 10 years. J.P. Morgan Securities must also disclose all events related to firms they’ve merged with recently, including Bear Stearns in 2008 and Chase Investment Services in 2012.

J.P. Morgan Securities has a long list of disclosures, running hundreds of pages on its Form ADV, related to both the firm as well as individual employees. Some of the more material allegations about the firm are from FINRA, the SEC and various state regulators, and include:

  • Between June 2009 and October 2011, the firm entered settlements with securities regulators in 47 states regarding allegations that it had misrepresented and omitted information around the marketing, sale and distribution of auction rate securities, claiming to customers the investments were safe, highly liquid investments similar to money market instruments. The firm settled without admitting or denying the allegations.
  • The SEC alleged that in 2002 and 2003 the firm made payments to private firms in exchange for government business in Jefferson County, Ala. Without admitting or denying the findings, the firm settled in November 2009.
  • FINRA alleged that the firm did not give the appropriate sales charge discounts to customers who purchased unit investment trusts. Without admitting or denying the allegations, the firm paid a $100,000 fine in December 2010.
  • The SEC alleged that the firm was negligent in providing additional disclosure in marketing materials for a certain collateralized debt obligation (CDO). Without admitting or denying the allegations, the firm agreed to a settlement in June 2011.
  • The SEC alleged the firm misrepresented and omitted information in connection with bidding on certain municipal reinvestment instruments. Without admitting or denying the allegations, the firm consented and paid $51.2 million to certain municipalities and other tax-exempt issuers in July 2011.
  • The Florida Office of Financial Regulation alleged the firm failed to register three investment advisor representatives in Florida who were conducting advisory business. The firm consented in October 2011.
  • FINRA alleged the firm failed to establish systems and procedures adequate to supervise the sales of certain unit investment trusts and floating rate funds. In November 2011, without admitting or denying the allegations, the firm consented, paid a fine of $1.7 million and agreed to compensate customers that lost money as a result.
  • The SEC alleged the firm failed to disclose information regarding settlements entered into by a Bear Stearns’ affiliate with loan originators that had been securitized into residential mortgage-backed securities around 2005. Without admitting or denying the allegations, the firm consented.
  • The SEC alleged the firm failed to adequately disclose a preference for affiliated mutual funds in certain discretionary investment portfolios as well as the conflict of interest. The firm consented and acknowledged that certain conduct violated federal securities laws.
  • The Indiana Securities Division alleged that certain of the firm’s conduct was outside the standards of honesty and ethics generally accepted in the securities trade and industry, specifically that the firm failed to disclose to Indiana investors that certain proprietary mutual funds purchased for clients offered institutional shares that were less expensive than the shares the firm chose for clients. Without admitting liability, the firm consented to the agreement and agreed to pay a total of $950,000.
  • FINRA alleged the firm failed to adequately monitor and evaluate a vendor responsible for rebalancing portfolios and calculating fees. Without admitting or denying the allegations, the firm consented that it failed to maintain a proper system and procedures and paid restitution of $4.6 million to affected customers.
  • The SEC alleged the firm negligently omitted to state that it received greater compensation from eligible customers’ purchases of more expensive mutual fund share classes, creating a conflict of interest. Without admitting or denying the allegations, the firm settled and agreed to pay a penalty totaling $1.8 million.
  • The Kentucky Department of Financial Institutions alleged the firm failed to disclose conflicts of interest related to the J.P. Morgan funds. Without admitting or denying the allegations, the firm settled and agreed to pay a penalty of $325,000.

J.P. Morgan Securities onboarding process

To contact the firm to learn more about its services, clients can fill out the Contact Us form provided on its website. Before clients open an account with J.P. Morgan Securities, they’ll need to sign a client agreement. It is the client’s responsibility to inform J.P. Morgan Securities if anything in their financial life changes after they’ve opened their account.

Clients will have portfolio reviews at varying frequencies depending on the account, perhaps as often as semiannually in the Portfolio Advisor Program.

Is J.P. Morgan Securities right for you?

J.P. Morgan Securities offers individuals a long list of investment choices, providing options for fledgling as well as sophisticated investors. Clients can choose among actively managed and passive funds, internal and external portfolio managers, single- or multi-asset class strategies, and online or face-to-face advisory services. Additionally, clients can decide if they’d like to make the final decisions on trades, or if they’d like to hand the day-to-day management of the account over to a professional, known as discretionary management.

J.P. Morgan Securities offers its investment options through multiple sales channels, including through J.P. Morgan as well as Chase Investments and Private Client. Occasionally, similar investment options may be made at a lower cost through another program, so be sure to confirm with your advisor that another cheaper program isn’t available elsewhere through the firm.

As always, when you’re looking for a financial advisor, it’s your responsibility to understand how much you’re paying for their advisory services, as well as what alternative options exist.

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