Our financial careers series continues with arguably the most prestigious or ‘white shoe’ firm of all, J.P. Morgan. The firm has grown considerably in size through acquisitions including Chase Bank, Cazenove and One Equity Partners, now employing over 235,000 financial professionals worldwide.1 The firm is involved in every aspect of finance you can think of and JP Morgan careers are highly respected.
If you can land an interview, it helps if you go into it knowing the history of the company (you never know how prepared an interviewer expects you to be). Knowing the background and operations of any firm is the first thing you should learn when preparing for an interview.
The Founder’s Background
The firm has roots going back hundreds of years. J.P. Morgan (known as ‘Pierpont’) was born in 1837 to a prominent banking family. Pierpont was expected to eventually take over the firm from his father Junius, a wildly successful merchant banker. Junius’ firm, J.S. Morgan & Company, actually financed a $50 million loan to the French in 1870 during the Franco-Prussian War.2 As we’ll see later, helping out cash-strapped governments becomes a recurring theme for J.P. Morgan.
J.P. Morgan, though his financing, was actually an integral part of Thomas Edison’s work creating the lightbulb.3 Morgan teamed up with Edison and the pair set out to revolutionize the light industry.
J.P. Morgan once held a high society affair at his home in Manhattan- the home lit up with a chandelier powered by Edison’s bulbs.4 It was the first home in America to use the light bulb.
Over time, Morgan switched allegiances towards a different electric technology, alternating current (AC), pioneered by Edison’s former assistant Nikolai Tesla. So, Pierpont bought a majority stake in Edison General Electric, fired Edison and merged with an AC company to form General Electric. Still, it was Morgan’s initial financing that helped launch this new industry.
That same spirit exists today through the J.P. Morgan Private Equity Group, which finances startups through their early stages. The group invests primarily in U.S. technology, telecom and social networking companies but also has a foothold in China, Israel and India.5
J.P. Morgan helped bailout the United States government on at least two occasions. The first was during the ‘Panic of 1893′ when there was a run on the U.S. Treasury’s gold reserves by foreigners who held dollars. At the time, the U.S. was on the Gold Standard and foreign depositors began redeeming their dollars for gold and exporting it. This led to dangerously low gold reserves. So, J.P. Morgan dutifully supplied the Treasury with $65 million in gold in exchange for a 30-year U.S. Treasury bond, averting the crisis.6
Again, Morgan was instrumental in saving the banking system (and the stock market) during the ‘Panic of 1907’. He provided loans to shore up troubled banks and organized other bankers and financiers to do the same. Most of this was done behind closed doors over the course of a weekend. An interesting story from this event was the committee he helped create that weekend took aim not at high finance, but a higher power.
The committee urged the clergy, nationwide, to appeal to their parishioners during Sunday mass in an attempt to calm their fears and avoid a further run on banks come Monday morning.7 It worked.
Given this backdrop, it is somewhat ironic that J.P. Morgan received $25 billion in TARP bailout funds themselves during the Financial Crisis.8 J.P. Morgan CEO Jamie Dimon will probably argue that the bank was coerced into accepting the funds, but that is another matter.
J.P. Morgan Today
J.P. Morgan remains the largest bank in the United States.9 The firm is still headquartered in New York City and run by the larger than life Jamie Dimon. Dimon rose to the top through Banc One, acquired by J.P. Morgan. As CEO, he is the face of the bank and a frequent guest on financial news networks. Dimon has even been known to pop up at press conferences to grill Federal Reserve Chairpersons.
In 2016, Dimon made one of the best insider trades (the legal kind) that has been seen in recent years. Dimon purchased 500,000 shares of stock on February 11th when J.P. Morgan shares (symbol: JPM) hovered around the $53 level (costing Dimon over $26 million of his own money).10 The stock currently trades around $85, earning Dimon well over $15 million on paper.11,12 That’s the kind of confidence employees like to see from their CEO. Not surprisingly, 89% of current and former employees ‘approve’ of Mr. Dimon according to review site, Glassdoor.13
JP Morgan Careers
There is a major distinction between investment banking or corporate finance jobs at J.P. Morgan and the more retail banking operations at Chase. We have read some negative sentiment about working at the Chase consumer finance division of J.P. Morgan. These are generally not high-paying jobs and job security can be quite low. A graduate-level degree or professional certification could help leapfrog over these relationship banking positions (where upward mobility can be constrained) into a more managerial role.
The investment banking division at J.P.Morgan is very prestigious. Investment bankers raise capital for businesses, publicly traded corporations, even governments. They work in tandem with the capital markets division, underwriting both debt and equity offerings and provide advisory services on M&A transactions. But this job is not for the faint of heart.
While investment banking jobs are notoriously grinding, J.P. Morgan, through their “Pencils Down” initiative, recently allowed weekends off for investment bankers.14
While that may seem like standard worker’s rights, in investment banking it isn’t. That is actually a huge benefit considering bankers sometimes endure 80-hour work weeks during their first couple of years. Working on the weekends is expected.
But many would argue it’s worth it. According to 2014 research from salary benchmarking firm Emolument.com, the average Director at J.P. Morgan earns 416,000 pounds per year (roughly $515,000) coming in the form of 214,000 ($265,000) in salary and 272,000 ($337,000) from a year-end bonus.15 This was tops for the major investment banks, even outpacing traditional compensation heavyweights Goldman Sachs and Morgan Stanley.16
In the hierarchy of investment banking, the typical career progression is Analyst, Associate, Vice President, Director, Managing Director and Partner (if a partnership). Analysts are typically twenty-somethings, recently removed from an undergraduate program. They do most of their group’s grunt work; enduring long hours on spreadsheets or putting together pitch books.
After about three years, an Analyst may get promoted to Associate, assuming good job performance. Here, they see more responsibility in the deal making process as well as communicating with smaller clients. Coming out of a strong MBA program like NYU’s Stern, Emory’s Goizueta or Johns Hopkin’s Carey Business School may allow professionals to jump the Analyst level and go right to Associate.
Increasing responsibility including travel and client interaction accompany professionals as they climb the remainder of the ladder. The best way to get on the management track is with an advanced degree such as an online MBA, Masters in Finance, or Masters in Economics. With so many programs offered online, it is easier than ever to get the ball rolling.