J.P. Morgan realigns executives to better integrate its businesses

J.P. Morgan Asset Management has reorganized its investment management team to create a more interconnected organization, the biggest move being the appointment of Chris Willcox to the new position of global investment management CEO.

“We're now running a very joined-up business,” Mr. Willcox said in an interview. “When you're a broad organization like J.P. Morgan, you have to be able to communicate your mission internally (to staff) and externally (to clients).”

Until last year, Mary Erdoes, CEO of J.P. Morgan Asset Management, oversaw the New York-based money manager's investment management operations — as well as those of the private bank — with each business head reporting directly to her.

J.P. Morgan Asset Management has $1.71 trillion of assets under management.

In May, Ms. Erdoes decided to step back from directly overseeing JPMAM's investment management operations and created the new position of global investment management CEO, appointing Mr. Willcox, JPMAM's head of global fixed income at the time, to the role.

“It makes a lot of sense for Mary Erdoes to create dedicated management for the asset management business, since she also has the private bank reporting to her,” said Domonkos L. Koltai, a partner and co-founder of investment bank PL Advisors, New York, in a phone interview. “Those are two large businesses with different drivers and competitors.”

Prior to Mr. Willcox's appointment, Jamie Kramer, J.P. Morgan Private Bank's former global head of thematic advisory, moved to JPMAM as global head of strategic product management in March.

Since assuming the role of investment management chief, Mr. Willcox has restructured his team to, he said, better integrate the firm's different business areas.

In October, Jed Laskowitz, head of the funds business in Asia and regional CEO of Asia, and Michael O'Brien, global head of institutional, were named co-heads of JPMAM's global investment management solutions business, which combines the firm's $150 billion multiasset-class investment business with its advisory solutions and capital markets capabilities.

Mr. O'Brien also was named regional CEO for Europe, the Middle East and Africa, replacing Peter Schwicht, who retired in October.

While Mr. Laskowitz retained the role of Asia regional CEO, Michael Falcon, managing director and former head of JPMAM's retirement business, assumed Mr. Laskowitz's responsibilities over the firm's mutual fund business in the Asia-Pacific region.

Also in October, George Gatch, former head of global funds, became global head of investment management clients, with all of the regional institutional and funds business heads reporting to him. Mr. Gatch also assumed Mr. O'Brien's previous responsibilities as global head of institutional.

In January, John Donohue, head of global liquidity, was named CEO for the Americas. He replaced Catherine Keating, who left the firm to become CEO of Commonfund. Mr. Donohue will retain his responsibilities as global liquidity head.

Bob Michele, chief investment officer of global fixed income, currency and commodities, replaced Mr. Willcox as head of global fixed income.

The purpose of this restructuring, Mr. Willcox said, is to bring JPMAM's retail and institutional distribution functions together under one umbrella, to invest more in multiasset and customized investment solutions, and to open the lines of communication among all investment strategies.

For example, previously the firm spent less time examining how its funds business correlated to its equities business. Essentially, each channel was working independently of one another, all reporting directly to Ms. Erdoes. Now, there is more cross-communication among the business investment areas.

“We've been revamping how the organization talks to itself,” said Mr. Willcox, who reports directly to Ms. Erdoes.

“J.P. Morgan has historically been very good at promoting internally,” one executive recruiter who didn't want to be named said. The recruiter added: “Our clients on the investment side are struggling with being able to move into a more flexible framework to provide more multiasset solutions. J.P. Morgan Asset Management certainly has the infrastructure in place to do this.”

In addition to integrating the investment management team to augment its multiasset-class solutions, Mr. Willcox said the investment team is looking to invest in its technology and infrastructure.

“We're looking at our competitors and making sure we've got good technology,” Mr. Willcox added, citing BlackRock Inc.'s Aladdin system as an example of a good risk management network.

Shortly after Mr. Willcox came on board as JPMAM's global head of investment management, he set up and leads an investment strategy review group that consists of senior investors and business heads, which meets annually to discuss where the unit is and where it's going.

JPMAM is making these changes at a time when the company is seeing positive net inflows. The firm reported net inflows of $37 billion for the three months ended Dec. 31, the 23rd consecutive quarter the money management business reported net long-term inflows.

“They're coming at this (restructuring) from a position of strength,” PL Advisors' Mr. Koltai said. “It doesn't look like they were forced to make any changes, because what they were doing before worked just fine.”

Still, there is some speculation among industry observers about how this newly reorganized leadership structure will fare. Mr. Koltai wondered: “Can J.P. Morgan integrate all these separate investment teams into a more cooperative, coordinated organization without losing their performance edge?”

One source speculated whether integrating the investment management team could cause friction among portfolio managers who often prefer to work independently and be left to their own devices.

But Mr. Willcox is confident that JPMAM's new interconnected team will produce improved results and enhance the firm's multiasset capabilities.

“It's a huge mistake when the leader is too removed from the investment process,” he said.

Mr. Willcox said that he has no plans to recruit any additional staff. He declined to comment on the possible launching of any new investment strategies. n