Merrill, JPMorgan make new bids for wealthy clients

Maybe you’re a JPMorgan advisor with a wealthy client who needs to charter a private jet. Or maybe you’re at Merrill and have a successful business owner client who wants a stake in a professional sports team.

In either case, you’re at a firm going beyond basic financial planning by rolling out an ever-widening variety of services for high net worth and ultrahigh net worth investors. Last week, JPMorgan introduced its Lifestyle Services Offering, helping advisors provide everything from private flights to bill-payment services and cybersecurity. Separately, Merrill announced its new Lending Solutions Group, marshalling its and Bank of America’s expertise in providing loans to clients with complex income sources and asset holdings.

But it’s not just the big Wall Street firms. St. Louis-based brokerage Edward Jones, long specializing in working with everyday investors, announced last week it’s going upmarket with four new offices and training advisors through its Generations program, meant for clients with $10 million or more to invest.

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Making money isn’t the only reason that firms seek to work more with the well-to-do, although it’s a big driver. With fees set at a percentage of assets under management increasingly becoming the prime revenue source in the wealth industry, firms have an obvious incentive to boost their AUM tallies by drawing clients with plenty of money to move.

Beyond revenue generation, though, wealthy clients tend to have a broader range of needs and demands than everyday investors. Those can give firms not only additional opportunities to make money by providing sought-after services but also a way to become indispensable to highly prized investors, making them less likely to take their business to an industry rival.

Need help buying a private plane?

In recent years, many wealth managers have responded to the demands of high net worth and ultrahigh net worth clients by forming multifamily offices with the types of offerings that wealthy investors might have gotten in the past only by setting up their own family offices. JPMorgan started its own family office business in 2023.

Its new Lifestyle Services Offering builds on that by furnishing financial advisors with a list of vetted service providers they can call on any time clients want help with something beyond the firm’s expertise. Jess Douieb, the head of wealth partners at J.P. Morgan Advisors, said the most sought-after services from wealthy clients these days involve arranging private flights, a business that seems to have boomed during and after the COVID-19 pandemic.

“The private aviation marketplace has evolved tremendously in terms of consolidation with different players and the many different options that clients have,” Douieb said. “It goes from just jet cards, to chartering planes and, in some cases, purchasing planes out right.”

Another common request is for help with cybersecurity outside of JPMorgan transactions. Douieb said clients don’t just want help ensuring financial information they may have stored somewhere else is safe; they also need instruction on ways to keep themselves and their loved ones from falling prey to scams. Other offerings provide assistance with managing art collections, hiring staff and planning vacations.

Paying bills is probably the most comprehensive task for which high net worth and ultrahigh net worth clients want help, including everything from landscaping and remodeling to medical and tuition needs.

“It’s very administrative heavy,” Douieb said. “And it has to get done and again, and sometimes it needs a lot of customization.”

Douieb said there’s nothing new about JPMorgan advisors being asked for this sort of help. Lifestyle Services simply provides a formal way to meet those needs using a list of service providers whose quality has been verified by the firm.

“JPMorgan has always had an incredible network,” Douieb said. “But how do we extend the JPMorgan network more formally to our clients, and also make sure that we’re really evaluating the quality of these providers?”

Borrowing against an art collection

Merrill is similarly trying to use its and Bank of America’s long-established expertise in complicated to appeal to more high net worth and ultrahigh net worth clients. The unit will be under Kurt Niemeyer, a Bank of America managing director who has long worked in the firm’s loan business, and will have 20 lending specialists working with advisors in Merrill offices around the country.

Niemeyer said common reasons wealthy clients want to borrow money include to buy businesses, finance building projects, acquire commercial real estate or — increasingly — to indulge a dream to own a professional sports team in whole or in part. Sometimes borrowing is simply a way to bring in money without having to sell off long-held investments.

Although the well-to-do ostensibly have the wherewithal to pay back loans, a number of factors complicate lending to high net worth and ultrahigh net worth clients. Sometimes assets are tied up in complicated family estate plans. Sometimes wealthy clients derive a large share of their income from hedge funds or private businesses that aren’t easily understood by outsiders.

Sometimes they want to put up as collateral art, yachts, commercial real estate or other assets that are difficult to value. And sometimes their ability to repay hinges in part on plans to sell those assets at a future date.

“This has been around for a long time, through the Bank of America and our credit offerings,” Niemeyer said. “So we’ve got this great platform, and we just want to make sure that our advisors and clients are educated around what we do.”

Merrill has been trumpeting its success in recent quarters in bringing in ultrahigh net worth clients, which both it and JPMorgan define as investors with at least $10 million in assets. Discussing its earnings in July, Merrill said its relationships with those clients rose by 13%, although it did not report a total asset tally for these clients.

Firms to manage $30T for HNW clients by 2028: Cerulli

Consultants who study wealth management shed light on why the high net worth and ultrahigh net worth markets are so prized. The research firm Cerulli reported in August that firms will manage more than $30 trillion for high net worth clients by 2028 and the value of those assets will grow by 9.3% a year on average.

The consulting and accounting firm PwC separately found through its HNW Investor Survey 2022 that an absence of a broad array of offerings is a source of dissatisfaction for many wealthy clients. Nearly half of the respondents to PwC’s poll said they were considering changing wealth managers in the next year or two.

And nearly two-thirds said they already receive “value added” assistance that goes beyond basic financial planning.

“Among ultra-high-net-worth individuals — who are characterized as having more than $10 million in investable assets, with preferences for receiving specialized lending, business banking, succession planning and concierge services from a single source — that trend is even more prevalent (89%),” according to PwC.

Edward Jones seeks to join the party

At Edward Jones, the push to serve wealthier clients is taking physical shape in the form of four new offices. The first location for the Edward Jones Generations high net worth unit opened in Scottsdale, Arizona. Three more will follow in St. Louis and Dallas and West Palm Beach, Florida, this fall and next year.

Edward Jones, which has long specialized in working with clients with $250,000 to $5 million in investable assets, is also training advisors on helping wealthy investors, including instruction on advanced planning and complex investment products.

Tom Lewandowski, principal and leader of the firm’s HNW unit, said the new offices are meant to provide Edward Jones with all the trappings that wealthy clients expect from their wealth managers. Besides giving clients a place to meet advisors in person, the locations will house experts such as investment specialists, estate attorneys and certified public accountants.

Lewandowski said Edward Jones advisors often leave their offices for in-person meetings with investors.

“But if they want to come to us, they can do so in a setting that I would say is more associated with what you might expect from a private client services-like offering, from an office point of view,” he said.

Like many wealth managers, Edward Jones is moving to give high net worth clients greater access to alternatives like private credit, private equity and hedge funds. And it’s using vehicles like exchange funds and unified managed accounts, which bring various investments into a single account, to help clients who may be overly concentrated in stocks diversify in a way that doesn’t spike their tax bills.

Lewandowski noted that Edward Jones has roughly 20,000 advisors working throughout much of the U.S. and Canada. This gives the firm reach beyond the usual big wealth centers.

“A lot of those communities have small- and medium-size business owners, farmers, ranchers,” he said. “A lot of those folks are approaching retirement. And that introduces a ton of complexity for those individuals, their families, or it’s a business owner, their employees. We want to be there to help those types of families through that really important part of their life.”