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JPMorgan Chase and investment bank boutique Evercore have made Morgan Stanley a major competitor to Goldman Sachs, which is a core Wall Street trading consulting business.
JPMorgan charged $3.29 billion in economic advisory fees last year, including merger and acquisition fees, while Evercore’s record was $2.45 billion and Morgan Stanley’s $2.38 billion.
Mergers and acquisitions costs fluctuate between a quarter or even a few years, as they can run to tens of millions and are generally paid only when the deal is over. However, the 2024 fee confirms that the order of pecking on Wall Street has changed over the past decade, and JPMorgan’s arrival has traditionally been the company’s top lender, as well as senior board members like Evercore.
Goldman Sachs has long been advising CEOs on deals. Latest data suggests that JPMorgan has consolidated its position as the second-largest earner, but after a duel with Morgan Stanley in the 2010s.
Last year, JPMorgan Chase closed the gap with Goldman Sachs to a minimum for at least a decade. In the fourth quarter, it reported $1.06 billion in consulting fees – excluding revenue from stock and debt underwriting – defeated Goldman Sachs for the second time in a year.
Evercore’s expenses were $850 million in the quarter, while Morgan Stanley’s only $779 million.
Mergers and acquisitions are still the crown jewelry product in investment banking, and high-bet transactions attract corresponding fees. Meanwhile, M&A recommendations require only a few bankers, unlike the IPO or bond issue that requires personnel to have personnel.
“What you provide is not a commodity advice,” said Devin Ryan, an analyst at Citizen JMP Securities. “So, transaction fees are not under pressure like many areas in financial services.”
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As Morgan Stanley focuses on building wealth management businesses, changes in Wall Street Guard have unfolded, where it earns steady expenses that are valued by investors.
Morgan Stanley has always been a traditional investment banking blue blood, which evades business and investment banking after JPMorgan 90 years ago Business separate. Among its alumni are Joe Perella, Bob Greenhill, Frank Quattrone and Paul Taubman, each founded by everyone Good quality bank.
However, its wealth management strategy is backed by former CEO James Gorman, who retired from the position at the end of 2023. His successor, Ted Pick, had previously run Morgan Stanley’s investment bank, and was hoping for more resources among the company’s traders.
“Ted is relieved to be CEO from the bank’s side, not from one person in investment or wealth management,” said a Morgan Stanley investment banker.
However, bankers often work for years to promote corporate relationships that can generate profitable expenses in the industry, requiring long-term commitment to investment banking.
“Whatever deal happens this year, you will win them,” said a former senior investment banker at a large Wall Street company.
JPMorgan Chase has also used its wide range of products to work towards entering profitable consulting licenses and has made substantial investments in its M&A business.
“At some point, they say ‘Hey, we’re your biggest lender, so you should give us your advisory business.”
In 2023, the bank told investors it had designated $200 million to hire “income producers” in its companies and investment banks. Jamie Dimon, the bank’s long-time CEO, personally called coveted clients to call the JPMorgan case.
“JPMorgan Chase has been very stable and very committed to the growth of investment banks,” said Ryan, a citizen.
Evercore has been one of the biggest winners in new boutiques that don’t offer loans or trade services, including the main task of selling Calpine to Cartellation Energy for $29 billion.
It also expanded its consulting business to private funding transactions and restructuring recommendations outside of corporate mergers and acquisitions, while large investment banks are less competitive.
“They do a lot of things to build their own franchise and establish their own franchise,” said Aidan Hall, an analyst at Keefe, Bruyette & Woods.
Other challengers, such as Jefferies, have also taken advantage of the transformation on Wall Street to seize the ground for investment banking. Jefferies reported $1.8 billion in annual consulting fees to November, beating Bulge Bracket Banks of America and Citigroup after a recent recruitment hype.
