While the bankers weren’t explicitly told to push in-house funds, they said, meeting the revenue marks was all but impossible without selling the products that generate the highest fees for the bank, which include not only in-house investments but also those from partners that share their fees with the bank.
’Unapproved Funds’
Advisers could put their brokerage clients into other funds or instruments, but they wouldn’t get revenue credits for them, three former employees said. A mid-2016 compensation scorecard reviewed by Bloomberg referred to “unapproved” mutual funds as among the instruments that didn’t boost advisers’ tallies.
Oduyoye, the JPMorgan spokesman, said performance measures at the private bank “are designed to reflect how well bankers are serving clients as well as risk-management priorities of the firm.” He declined to say whether that represented a change in practice.
JPMorgan has in the past pitched investors on the synergies among its retail, commercial, investment banking and asset management businesses. A review of company filings and transcripts of investor calls indicates that JPMorgan has been the only big bank to break out revenue figures tied to cross-selling. Selling across the bank’s four main units contributed $7.5 billion in revenue in 2014, or more than 7 percent of all revenue, the bank said at a 2015 investor conference, the last time it provided such a figure.
‘Among the Best’
“Cross-selling is a big deal. And we do an exceptionally good job at cross-selling. We think we’re among the best out there,” Chief Executive Officer Jamie Dimon told an investor conference in September 2012, referring to the bank’s retail business. Fifteen months later he told another conference: “We do as much cross-sell as a Wells Fargo.”
Even as Wells Fargo pushed an in-house “Eight Is Great” target for cross-selling, JPMorgan was already nearly there: JPMorgan’s retail branches sold an average of 7.9 products and services per household in 2013, compared with Wells Fargo’s 6.2, according to the latest data available from both banks. (Comparable industrywide data is elusive.)
Dimon has publicly emphasized that cross-selling must benefit customers. “We don’t like the word cross-selling because it sounds like we’re doing it for us,” he told investors in 2015.
The Wells Fargo scandal prompted regulators to take a fresh look at the practice at the nation’s largest banks. The Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation asked banks in October for information about how their sales practices may disadvantage customers. The OCC said the investigation is still under way.