The lowly bank branch is JPMorgan’s key tool to reach the wealthy. Kristin Lemkau explains why.

Bank branches have steadily declined in number since the Great Recession. But the death of the branch is greatly exaggerated, JPMorgan’s Kristin Lemkau told B-17. The personal touch is good for customers and the bottom line, with branch advisors averaging 30 new clients a year, according to Lemkau, CEO of JPMorgan Wealth Management. That’s why the bank plans to open 500 new branches by 2027.

“Foot traffic is down but not down as much as you’d think. It’s just what they’re doing is different. They’re doing transactions here,” Lemkau said, pointing to her phone, “and they’re looking for advice and a financial relationship in the branch.”

Lemkau, previously JPMorgan’s CMO, took over the newly reorganized US wealth management division in late 2019. Despite being the country’s largest bank, JPMorgan lags behind its peers when it comes to managing money for affluent customers who are not rich enough for private banking. Lemkau’s mandate is to get the bank’s 82 million customers to invest their money with JPMorgan instead of with competitors like Morgan Stanley and Merrill Wealth Management.

The broad strokes of her strategy have remained consistent: improving products to reach clients with different levels of wealth and hiring more advisors to reach customers. To close the gap between self-directed investing and in-person advice, she launched a hybrid channel that offers low-cost financial advice via phone and video in the fall of 2022. As for head count, the number of advisors has grown by more than 30% to 5,800, putting her on track to meet her goal of 6,000 by 2025. Lemkau has already hit another goal of doubling client investment assets to $1 trillion.

“I’ve killed it!” she said with a laugh.

But the branches are a bigger part of the division’s growth than she originally imagined. She had planned to aggressively grow JPMorgan Advisors, the high-net-worth client unit, by doubling its head count to 1,000 advisors. She has since abandoned a head count target for the boutique unit, saying it will never resemble Merrill’s thundering herd of 13,000-plus advisors.

Thanks to the acquisition of First Republic, the unit has just under 700 advisors. But growing beyond that by recruiting top-notch teams one by one is slow and expensive.

“It’s almost like a mini M&A deal every time you acquire a team,” she said.

Branch advisors are also easier to retain than the elite teams that make up the high-net-worth advisory channel. This spring, there was an exodus of First Republic teams before a deadline to move their assets. However, Lemkau said more than 80% of First Republic advisors remain at JPMorgan as of August 28.

She said the bank is “very choosy,” touting the recent hire of a $28 billion team from Merrill Wealth Management. But having a giant book is not enough. Lemkau wants employees who will stick around for the long run.

“I don’t want mercenaries,” she added.

If you can’t beat them, recruit them
When she joined JPMorgan nearly 26 years ago, she was interested in a short commute, not banking. (“I wanted to walk to work,” she quipped.) But finance runs in her family. Her late father, Curt, spent 25 years as a financial advisor at Merrill Lynch. Her two brothers have made their mark on Wall Street. Gregg runs a hybrid investment bank that caters to billionaires, and Chip is a managing director at Goldman Sachs in private wealth management. (Her youngest sibling, Holly, oversees events for consultant Teneo).

She views her move from marketing to wealth management as a natural one.

“As a marketer, your job is to grow the business,” she said. “It’s not to win awards. It’s not to dance on tables with Bon Jovi at Cannes.”

Despite being a JPMorgan veteran, she looked outward to build her leadership team. Several of her top hires initially turned down her offers, but she refused to take no for an answer.

“If the best person is outside the company, we will go get the best person,” she said.

She turned to Boaz Lahovitsky, the head of Vanguard’s robo-advisor, to build the hybrid channel, JPMorgan Personal Advisors. The new offering has led to billions in new assets, according to JPMorgan. As for the bank’s self-directed trading product, she brought in Paul Vienick, a top executive at TD Ameritrade who also helped build online brokerage Merrill Edge, to fix its shortcomings and add needed features like fractional shares.

“It was really nascent, and in retrospect, we probably shouldn’t have launched that thing until it has closed more of the competitive gaps,” she said of the bank’s original self-directed investing product launched in 2018.

This summer, Lemkau hired Anne Black, president of Goldman Sachs’s charitable fund, to advise on philanthropy for high-net-worth clients and Jane Bailey, chief financial officer of UBS’s wealth business in the Americas, to rein in expenses.

“Their strategy is not one that I would replicate or could replicate, but they were really, really disciplined on their P&L management,” she said of UBS.

She turned to Mollie Colavita, head of Merrill’s private wealth services, to oversee best practices for the branch-based advisors. Now, they undergo a two-year coaching program that automatically dismisses advisors who fail three sessions in a 12-month period.

“It’s a machine,” Lemkau said of the branch-based channel.

Back to the branches

Despite her focus on making it easier for customers to invest online, her strategy is analog at its core, with full-service advisory at the center. The division shut down its unprofitable robo-advisor in May with all accounts converted to self-directed accounts.

Lemkau views self-directed trading as important in its own right and as a retention tool for advisory customers.

“Most people have a full-service advisor and some type of self-directed money on the side,” she said, “so we frankly need it in order to protect the full-service business.”

Everything circles back to the branches. Wealth Plan, a free financial planning tool in the Chase app, connects prospective customers to advisors online. But branch bankers can also use Wealth Plan to get the ball rolling with prospective clients.

“It’s a better conversation for the banker of, ‘Hey, tell me about you and tell me about what you’re interested in'” she said. “You’re going to have a better conversation than, ‘Hey, can you meet my friend, the advisor up the hall?’ Which sounds just a little cheesy and sales-y.”

If all goes according to plan, branch advisors will take advantage of the new products in order to focus on richer clients with $1 million to $10 million in investible assets, Lemkau said. The advisors can direct less affluent clients with simpler needs to hybrid advice or self-directed investing.

She sees AI as a timesaver for advisors but not a substitute. Lemkau said her advisors can expect to get an AI productivity tool that helps them with their “homework,” aka preparing for client meetings, in the first quarter of 2025.

However, she is concerned that AI’s racial and gender bias could influence its financial suggestions. Moreover, she doesn’t think there is a strong market for AI financial advice.

“I do not see it replacing human advice. I don’t think the regulators do. I don’t think that’s what people want,” she said. “I think they’ll always want to talk to a human.”