JPMorgan Takes on Goldman with Eye Towards The Uber Rich

JPMorgan Chase is no stranger to the super-wealthy, but a new business strategy has it ramping up the competition for wealth management’s richest clientele.

The Wall Street bank’s new push for the upper crust brought in more than $15 billion from ultra-high-net-worth clients, according to the Financial Times, and is placing it on a collision course with some of the biggest names in asset management, like Goldman Sachs and Morgan Stanley.

Death and Capital Gains Taxes

You might remember Goldman Sachs trying and failing to court Main Street consumers with products like Marcus and the Apple Card in recent years. Well, JPMorgan is doing the exact opposite.

The strategy taps into the growing popularity of separately managed accounts (SMAs). In addition to full ownership of the securities, SMAs’ big draw for wealthy investors is that they are good vehicles for tax-loss harvesting, when realized losses offset gains and eliminate the need to pay capital gains taxes.They also come with steeper fees and higher minimums, meaning, for the most part, only the rich stand to benefit:

• One JPMorgan banker told the FT, “(SMAs) might be the fastest-growing piece of asset management over the last 18-plus months.”

• An extra $15 billion may sound like a lot, and is providing JPMorgan good momentum in the UHNW space, but it can also be seen as chump change. In 2023, assets in SMAs grew to $2.2 trillion, according to Cerulli Associates data reported by the FT.
• Goldman Sach and Morgan Stanley’s Parametric accounted for the largest portions, with JPMorgan in third. 

Even if JPMorgan is playing SMA catchup, ultra-wealth is certainly not in short supply for the Manhattan bank: It still has its 23 Wall unit, which advises fewer than 1,000 families worth more than $4.5 trillion.

Everybody’s Doing It: While big banks and the super-rich have an affinity for SMAs, small(er) fries like Invesco and Allspring Global Investments are getting in on the action, too. Earlier this year, the Wall Street Journal reported that the average SMA size is $450,000, but even Morgan Stanley offers options to open an account that lets investors hold fractional shares of stocks or ETFS for just $10,000. Oh, to experience how the other half lives.