JPMorgan Private Bank’s $10M Minimum Rattles Clients and Bankers

March 22, 2016

A report that J.P. Morgan Chase will double the minimum asset requirement for clients of its private bank to $10 million has shaken some clients near or below the new target, a Morgan banker in the Midwest tells us.

“We’ve fielded a number of calls,” he said. “A good number of people read the [Wall Street Journal] article and have been left questioning whether or not they’re going to be moved around in the bank or asked to leave the bank….Someone with $7 million is having a different reaction than [someone with] $17 million.”

A $10 million cutoff would affect around 10% of private bank clients, The Wall Street Journal wrote, citing a J.P. Morgan presentation from February that showed some 90% of private bank clients had more than $10 million in assets. Those who don’t meet the new minimum will be serviced by the bank’s Private Client Direct unit, a segment that gives less customized support than the traditional private bank.

The shift to the lower-service level will begin early in 2017, giving bankers an incentive this year to pull in more assets that clients may be holding in other institutions, said the banker, who spoke on condition of anonymity.

He also said that bankers will have some latitude in applying the new standard, particularly with clients who could easily meet the minimum by transferring assets to the


“The answer to anyone who is calling asking those questions now is, ‘No, you’re not being moved around at the bank — for now,’” he said.

A J.P. Morgan spokeswoman declined comment.

Tightened minimums could further depress private bankers, who have been under pressure to produce or perish. JP Morgan has cut some 100 bankers, including managing directors, in recent months amid, the Journal reported.  JP Morgan also has imposed rigorous performance-improvement plans on many employees in recent months, the paper said.

A raising of minimums would deplete the pool of prospects for private bankers and force them to compete in an already overheated market with other bankers and brokers pursuing the “ultra-high-net-worth.”

To be sure, J.P. Morgan plans to beef up staffing in the lower-service Private Client Direct unit in anticipation of a migration from the higher private banking tier, the Journal wrote.

Morgan’s redrawing of the boundaries between the merely affluent and the super-rich would further blur the lines among banks and brokerage firms as they pursue a wider range of wealthy clients.

Firms such as Morgan Stanley and Merrill Lynch have been pitching traditional services such as cash management and trust-and-estate advice to try to attract more traditional private banking clients while JPMorgan and Citi have been promoting high-yield investments that were traditionally the turf of the brokers and investment banks to increase non-interest revenue.


NEXT: If Your Compliance Officer Could Really Talk…

Category: Wealth management

Similar articles: