In case you missed it, during the holidays Barron’s published a piece on JP Morgan’s enhanced efforts in the self-directed trading space. They quoted Paul Vienick, head of JP Morgan Online Investing, as saying they want to be a “top five” player in the space. That is an ambitious goal given the established competition, although they are leaving themselves some room to trail the mega-players.
They have been quietly adding to their offering with the introduction of fractional shares, fixed income trading, enhanced investment screening, and trust accounts in 2024, a trend I expect to continue in 2025 as they join in the feature race. And to their credit, they have reportedly grown 80% over the last two years to $100 billion, which seems like a good start. While this puts them well behind the likes of Schwab and Fidelity, perhaps it puts something like Robinhood or eToro in their sights. According to Vienick, the rally point in the distance is around $1 trillion.
To the extent that Jamie Dimon is walking around with “Self-Directed Trading” written down on his index card, the question might be “why?” As with most things in wealth management, the odds-on bet is it’s to grow advisory assets under management. As we read the article, the rationale goes something like this:
1. According to Gallup, stock ownership is on the rise with 62% of Americans owning stock vs 55% in 2020, the highest level since 2008.
2. According to Broadridge, one-third of self-directed investors have a current advisory relationship. This may indicate a broader latent desire amongst the remaining two-thirds to also have access to advice.
3. JP Morgan/Chase has thousands of bank-based advisors able to service any advice needs that self-directed investors might want in a personal banking/self-directed trading/professional advice one-stop shop.
From the standpoint of our WealthTech world, it could mean some potential tuck-in acquisition activity for JP Morgan and others in the space as people look to build out their platforms. Given how finicky we believe self-directed investors can be, feature set and user experience are likely to be important decision factors. It could also mean larger acquisitions and consolidation. Note that Morgan Stanley bought E*Trade to enter the self-directed market back in 2020 for $13b.
As organic growth continues to be a strong area of focus for wealth management going into 2025, I believe this is a theme worth watching.
Link to article here (paywall): https://www.barrons.com/advisor/articles/jpmorgan-self-directed-investors-brokerage-7f74f6c7?mod=article_inline