JP Morgan gets a 39-page blasting of its corroded culture and ground lost to Silicon Valley robos -- authored by its CEO Jamie Dimon
The letter to shareholders by Wall Street's sultan shows uncharacteristic humility but some analysts question the missive's sincerity
Teresa Vollenweider
A leopard does not change its spots; it would have to be skinned to change, and I don’t think that Jamie Dimon is going to allow anyone to skin him.
Would it really be that difficult to build the most successful wealth management business (from the perspective of the industry and not its clients-customer) if one simply used the biggest and most perverse incentives to reward product peddlers—pseudo financial advisors/pseudo investment bankers—for screwing their customers-clients? I don’t think that that would really be that difficult. It would be difficult if one did it through hard work and perseverance and working solely in the best interest of one’s clients-customers, but alas, that is not what JP Morgan is known for and it never will be known for that. I think that RIAs can rest easy in that regard. I expect that JP Morgan will simply masquerade as an RIA and spew lies about a fiduciary obligation to its clients-customers. Some fancy-schmancy window dressing if you will.
I will never trust a bank with the name JP Morgan or JP Morgan Chase. Jamie Dimon has decimated that brand name. That “if” in “And if Jamie Dimon is sincere…” is one gigantic “if,” and I’m not buying it. A leopard does NOT change its spots. Jamie Dimon has NOT found the lord. Jamie Dimon has NOT turned over a new leaf. Jamie Dimon is NOT a changed man. Jamie Dimon has NOT all of a sudden developed a moral compass. Jamie Dimon IS without integrity. The con is alive and well.
So who do you want to deal with (I note that Spears said “deal with” and not “trust”) the guy wearing the black hat or the guy wearing the white hat over the top of a black hat—a con artist? One knows not to trust the broker who says he’s a broker wearing the black hat, but one is being conned by the broker masquerading as an advisor who is wearing the white hat over the top of the black hat.
Mr. Merrill Lynch/Thiel, here’s what I think of your goals-based window dressing. The broker masquerading as an advisor will simply manipulate the investor’s goals to fit the firm’s and the brokers needs/wants. They manipulate investors’ investment objective and risk tolerances. What makes anyone think that they won’t manipulate investors’ goals?
The perverse incentivization to screw clients must end. Until it does bank employees will continue to screw their clients-customers. Stimulus > Response (Pavlov’s Dogs) Provide a positive or negative reward to reinforce/entice the behavior that you wish the subject to elicit. Behavior Modification 101.
Tim Welsh hit the nail on the head.
Stephen Winks
Jamie Dimon is providing much needed leadership in an industry that has long experienced a leadership vacuum. As he says, “We need to create an environment where people can raise issues, admit and analyst mistakes without retribution”. All the questions are known and the answers are clear. Jamie is making it ok for the best interests of the investing public to be addressed. If our industry regulators were to support the best interest of the investing public rather than protect brokerage interests, there would no complexity in embracing regulatory reform and fiduciary duty.
It is now John Theil of Merrill and Jamie Dimon who see the industry’s unrelenting and unsentimental evolution to supporting individualized advice and professional fiduciary standing in the consumer’s best interest. There will be many other brokerage industry executives who will follow, if they are to survive in the emerging competitive business environment. They understand in a free market the best interest of the investing public will prevail with them or without them as technology is the great leveler and does not care how big a firm is. The only thing that matters is whether the advisor is actually accountable for their recommendations and can they demonstrably fulfill their on going fiduciary duties—a business model to which Wall Street is vulnerable.If Jamie Dimon hadn’t left Shearson, he would have built on the unique heritage of EF Hutton in pioneering advisory services in a brokerage format and the industry would have evolved more than a decade earlier to encompass expert fiduciary standing, for want of leadership. Jamie Dimon is advancing that leadership for the right reasons. This is a turning point.
Dimon understands it is not about protecting an outdated business model, it is about empowering advisors to act in the best interest of the investing public and providing high level individualized advice at lower cost than a packaged product where advisors have control over their value proposition, cost structure, margins and professional standing which does not look like todays expensive brokerage advice products. Modernity will prevail.
As Harvard’s Clayton Christensen counsels, the biggest mistake made when faced with industry redefining innovation, is firms look at innovation in the context of their existing business model when a new business model is in order. Jamie Dimon has awakened to new industry dynamics with the power to act and the industry will never be the same again.SCW
Stephen Winks
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