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The team at JPMorgan Chase's asset and wealth management division crunched the numbers on diversity at the end of 2021 and found that portfolio managers who are women and/or people of color manage 60% of the unit's assets.
"That's a really big number in the asset management industry," said Mary Callahan Erdoes, who has been CEO of JPMorgan's asset and wealth management unit since 2009.
But it's not the only big number achieved by Erdoes's unit, one of the largest at New York City-based JPMorgan. During the second quarter of 2021, the unit surpassed $4 trillion in assets under management.
"We were really pleased with the new flows that came in, particularly on the equity side," Erdoes said. "We were No. 1 in flows in active equities, which is really exciting for us, showing the belief that people have in our ability to help them through these challenging times."
For Erdoes, however, improving diversity is not the endgame.It is a byproduct of the desire to hire the best talent for the job, an imperative she traces to JPMorgan CEO Jamie Dimon. He has promoted women like Erdoes to lead three of its five business lines.
"That's not because someone said, 'We need diversity.' That's because he wanted to pick the greatest talent and put it there," said Erdoes, who says diversity of people leads to diversity of thought, which leads to better performance.
The growth in assets under management is a function of seeking to deliver the best performance and results for clients, she said. "Four trillion dollars is a byproduct of that."
It's not the only benefit, of course. Erdoes led the asset and wealth management division to record revenue of $17 billion in 2021, up 19% from the year before. The division also achieved record net income of $4.7 billion, up 58%.
Erdoes also has been presiding over a significant evolution in the way the company serves its clients. Erdoes describes it as bringing both personalization and scale to the business, allowing it to create customized solutions for clients, no matter the size of the assets they bring to the table.
"JPMorgan started many years ago managing money for large pension funds and large clients," she said. "But now, each and every day, we're able to bring the power of what we do to the person who wants to invest their first paycheck."
Ultimately, JPMorgan expects to bring technology to bear in a way that gives investors greater control over their money, allowing them to support companies that match their values, whatever they may be. "There's a day not too far away where you'll be able to toggle up and down all those things that you like or dislike and we can spit out an individual portfolio," Erdoes said.
Erdoes has been helping to build that capacity through acquisitions. Since 2020, the company has announced four deals, starting with the purchase of 55ip, a fintech company that helps financial advisors develop tax-smart investment strategies.
JPMorgan also purchased Campbell Global, a timber and forestry investor, and OpenInvest, a company that helps investors translate their environmental, social and governance preferences into action. For example, JPMorgan is using OpenInvest's technology to launch new sustainability reporting for clients.
The bank expects to add to its abilities by the end of the year when it completes its deal for GlobalShares, a cloud-based provider of share-plan management software for employee stock plans. GlobalShares, of Cork, Ireland, has nearly $200 billion in assets under administration for about 800,000 investors, mostly outside the U.S., Erdoes said. Those investors are employees who own shares in the companies where they work.
JPMorgan expects it can work with those investors to diversify their portfolios, Erdoes said. "That's a whole lot of new clients that we can hopefully help in some way."
Acquisitions are not the only avenue for growth, however. Recognizing that growth equity and private debt are among the fastest-growing asset classes in the alternatives industry, Erdoes decided last year to build out a platform to offer private investment strategies: JP Morgan Private Capital.
Erdoes also has been building on the company's commitment to addressing racial disparities in wealth. Her unit's newest program is an accelerator program developed in connection with Techstars, a global network for entrepreneurs. The program will invest up to $80 million in diverse entrepreneurs and founders.
