A Warning about JPMorgan's Mistrust and Mistakes Department

The web page describing JPMorgan's trusts and estates services dishes out the following boilerplate: "As the steward of considerable wealth, you face forces that can erode your assets. ... For more than 150 years, we have helped clients manage the transfer of their wealth to future generations and to charity. Our dedicated team of wealth advisors has multi-jurisdictional expertise and strong relationships with leading trust, estate and tax practitioners worldwide."

Sounds impressive, doesn't it? One hundred and fifty years of experience. A "dedicated team" of wealth advisors. "Multi-jurisdictional expertise." Strong relationships with leading trust, estate and tax practitioners. Very blue chip. How could you possibly go wrong doing business with a company like that?

Plenty.

I know something about JPMorgan. The bank administers my mother's trust fund, of which my sister and I are the beneficiaries. We have learned from hard experience that if you don't fit the profile of the bank's mega-bucks clientele -- if the size of your trust has been whittled down after more than 40 years of mismanagement to a mere pittance -- you don't qualify for any of that special treatment. No dedicated teams. No multi-jurisdictional expertise. You're assigned rotating trust administrators who give your account a cursory look a couple of times a year and make arbitrary decisions based on the most superficial knowledge, steering your dwindling assets into wildly inappropriate investments.

For a trust that recently exceeded $1 million last year, JPMorgan charged a base $2,000 fee plus a 1.25% commission on assets under management. Last year, those charges amounted to more than $17,000. If JPMorgan were a blue chip law firm whose senior partners charged $500 an hour, we would have been entitled to some 34 hours of time. I can assure you, our account didn't receive a tiny fraction of that consideration from the bank's middle management, much less its senior management.

In subsequent posts, I will lay out our indictment of JPMorgan and its predecessor banks who administered our trust. I'll recount the consistently below-market rates of return over decades. I'll recount the discovery, after more than 40 years, that the bank was applying the capital gains tax rate from the wrong jurisdiction. (That's "multi-jurisdictional expertise" for you!) And I'll show how the bank now has invested $400,000 in short-term financial instruments with yields so low that, after deducting the bank's management fee, my mother is deriving no income whatsoever from that portion of the trust!

Remember the "transfer of wealth" the JPMorgan web page talked about? The wealth isn't going to "future generations" -- it's funding shareholder dividends and executive bonuses. Among the "forces that erode your assets," it turns out that the most insidious is the JPMorgan trust department itself.