Barry Sommers, head of J.P. Morgan’s 415-strong advisory group, formerly Bear Stearns Private Client Services, is moving over to the bank-brokerage side of Chase’s business, taking charge of the 2,700 advisors working out of its 5,100 branches.

The move marks a heightened effort to position bank brokerage as a sophisticated planning service for wealthier clients, analysts say. In a release at the time of the announcement, Charlie Scharf, head of retail financial services at the bank and Sommers’ boss, conceded that “we can do far more for the affluent clients who already like doing business with Chase,” at branches and via ATMs. Affluent clients, those with $500,000 or more in investable assets, make up just 8% of the bank’s entire customer base and yet account for two-thirds of all deposits and investments. Chase reckons that it has, one way or another, 5% of its wealthy clients’ wallet share, but the potential is much higher should Sommers be successful. Scharf says that investment services had the potential to double its pretax profits to $1 billion annually.

Sophie Schmidt, senior analyst at Aite Group in Boston who has worked with Chase, says the appointment of a wirehouse chief to the bank channel is a further step toward the bank’s goal of moving from a transaction-oriented, meat-and-potatoes investment program to one that is more planning-oriented. Chase’s research has already indicated that advisors lean toward financial planning are more productive, and every Chase advisor now has access to MoneyGuide Pro, planning-oriented software, she says.

One challenge, Schmidt says, it to make sure Chase’s branches are up to the task of hosting high-end investment meetings with wealthy clients. Currently, some 70% of investment client meetings at Chase take place in branches, she says, and 30% occur at clients’ offices.

Whether or not Chase is a little late to the party is another question. “It’s in effect a ‘me too’ strategy on their part,” says a consultant in New York who asked not to be identified. “I’m sure they feel they lack that segment and this is an attempt to get a toehold in asset management through their branch network going forward.”

The consultant also mused that while Chase’s bank brokerage division was probably underperforming and could use a little help from a wirehouse-trained leader, Wall Street veterans can have a hard time embracing corporate strategy when it appears to compromise brokerage performance.

However, Scott Stathis, managing director and COO at Kehrer-LIMRA, points out that Sommers’ title, a newly created position, clearly lays out what the bank expects from him: CEO of retail affluent and investment services. “Obviously Chase wants someone to focus on affluent individuals with the emphasis on getting more of their money,” Stathis says of a title that screams “cross sell.”

Stathis, too, notes that Sommers faces a significant challenge accomplishing the lofty goal of doubling pretax profits. “He’s certainly got his work cut out for him because everyone else is doing the same thing [targeting affluent individuals], so it’s interesting what he’s going to do differently. It’s a tough nut to crack.”

However, Stathis adds that just because Chase is lagging its major competitors in aggressively targeting wealthy customers, “that’s no reason not to do it. Promoting [Sommers] sends a clear message that’s what they’re focusing on.”

After all, adds Paul Werlin, president of Human Capital Resources in St. Petersburg, Fla., “It makes sense for Chase to do this for revenue, profitability and customer stickiness. From what I’ve heard, most investment programs are having trouble hitting their numbers right now, and now’s the time to leverage what you’ve got.”

The real question, one that it’s too soon to answer, is how: “There are a lot of changes that need to take place to transition from transactions to deeper client relationships,” Schmidt says. “It’s a pretty big undertaking that’ll keep them busy for a few years.”



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