J.P. Morgan Chase & Co., 2005 Edition: WetFeet Insider Guide

The second-largest banking conglomerate on Wall Street, J.P. Morgan Chase is a leader in investment banking, financial services for consumers and

businesses, financial transaction processing, asset and wealth management, and private equity. If you

want a financial services job that offers prestige and long-term banking relationships, J.P. Morgan Chase could be the place for you. But be prepared to take on a lot of responsibility early, play by traditional rules, and put up with some bureaucracy in exchange for a long and lucrative career.

J.P. Morgan Chase & Co.

Careers/Job Search

J.P. Morgan Chase & Co.

Turn to this WetFeet Insider Guide to explore • How things have changed at the bank since the big merger. • How J.P. Morgan Chase differentiates itself from its competitors. • How the company is organized, from top to bottom. • About a typical day in the life for those working in investment banking, sales, investment management, and private banking at J.P. Morgan Chase. • What employees love most and like least about the firm. • How the bank’s recruiting process works. • Tips from insiders for scoring big points with your interviewer.

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2005 Edition

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Insider Guide

J.P. Morgan Chase & Co. 2005 Edition

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Table of Contents J.P. Morgan Chase at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Bottom Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Industry Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Organization of the Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

On the Job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Sales and Trading (Markets Group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Investment Management (Asset Management Group) . . . . . . . . . . . . . . . . . . . . . . 26 Private Banking (Asset Management Group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Equity Research (Markets Group) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Internal Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

The Workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Lifestyle and Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Workplace Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Compensation, Vacation, and Perks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Career Path. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Insider Scoop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Getting Hired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 The Recruiting Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Interviewing Tips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

For Your Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Recommended Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Key Numbers and People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

At A Glance

J.P. Morgan Chase at a Glance Headquarters 270 Park Avenue New York, NY 10017 Phone: 212-270-6000 Fax: 212-270-2613 www.jpmorganchase.com

Primary Competitors • Investment banking: Goldman Sachs, Merrill Lynch, Morgan Stanley, Citigroup’s Global Corporate and Investment Bank • Retail brokerage: Bear Stearns • Asset management: Fidelity, Vanguard • Full-service and commercial banks: Citigroup, Bank of America

Key Differentiating Factors • J.P. Morgan Chase & Co. and Bank One officially merged on July 1, 2004, creating the country’s second-largest financial services firm. In 2003, the two separate companies would have had combined earnings of over $9 billion, split evenly between wholesale and retail. The merged, $58 billion company is the second-largest U.S. credit card issuer, and has assets of $1.1 trillion, trailing only Citigroup, which has $1.21 trillion. J.P. Morgan now has 2,300 bank branches in 17 states. • In 2000, J.P. Morgan merged with Chase Manhattan bank. These were the last two commercial banks that had established investment banks without making an acquisition. • Don’t confuse J.P. Morgan Chase with Morgan Stanley. The former is a commercial and investment bank holding company; the latter is an investment bank spun off from J.P. Morgan in 1935.

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At A Glance

In the Interview • Know exactly why you want to work for J.P. Morgan Chase and why you want to work in investment banking. • Demonstrate that you understand the broad implications of the merger with Bank One and the advantages it conveys. For example, know that J.P. Morgan President Jamie Dimon, who is the former CEO of Bank One and is slated to take over that post at J.P. Morgan in 2008, helped execute a very successful strategy in a similar situation at Citibank in the ‘90s. • Be aware of the differences between the company’s five major business segments (see “Organization of the Firm”). Ask strategic questions about the group or area you are applying for. • Show knowledge of some of the deals transacted with company clients, especially those mentioned in the 2003 annual report, such as Microsoft (creation of the first-ever transferable employee stock option), Panamerican Beverages, Inc. (advised its acquisition by Coca-Cola FEMSA), Ripplewood Holdings (advised its acquisition of Japan Telecom Co Ltd), and News Corp (advised on landmark $6.6 billion purchase of 34 percent interest in Hughes Electronics). • Be up on the news. Do you know what the Fed fund rate is right now? Why is Ford’s P/E ratio so much lower than Kellogg’s? Make sure you know how the market is doing the day you interview, and be familiar with any recent important economic news. • Examine your resume for weak spots and formulate a solid response to any that you find—they’ll more than likely query you on them.

What Insiders Say “I read an article that called J.P. Morgan ‘the banker’s bank’—and it’s true.” “Loudmouths need not apply. This place has a classy rep that does not encourage lone rangers.” “I’m not working here exclusively for the resume cachet, although that’s certainly part of it.” “They let you bring your ideas to the table.” “Junior people have the opportunity to switch gears and work across a range of businesses.”

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At A Glance

The Career Ladder • Undergraduates are hired as analysts or trainees. • MBAs are hired as associates.

Personnel Number of professionals worldwide: approximately 140,000



Anticipated Compensation, 2004–05

MBAs Estimated starting salary:

$85,000–95,000

Estimated signing bonus:

competitive

Estimated year-end bonus:

competitive

Undergraduates Estimated starting salary:

$55,000–65,000

Estimated signing bonus:

competitive

Estimated year-end bonus:

competitive Source: WetFeet research.

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The Firm

The Firm • Overview • The Bottom Line • Industry Position • Organization of the Firm

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Overview The Firm

J.P. Morgan Chase & Co. (JPMC), a leading global financial services firm with assets of $1.1 trillion and operations in more than 50 countries, is the result of one huge, recent merger and several smaller mergers half a decade earlier. The current firm was created July 1, 2004 by merging Bank One, formerly the sixthlargest U.S. bank holding company with $275 in assets, with the former J.P. Morgan Chase, then the second-largest bank with $793 billion in assets. The new firm is a colossus that nips at Citibank’s heels, a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity. A component of the Dow Jones Industrial Average, J.P. Morgan Chase & Co. has its corporate headquarters in New York and its U.S. retail financial services and commercial banking headquarters in Chicago. Under the J.P. Morgan Chase and Bank One brands, the firm serves millions of American consumers and many of the world’s most prominent corporate, institutional, and government clients. JPMC’s component firms were also created by relatively recent mergers. Mergers that were considered blockbusters in their day. In 1998, Bank One stunned its hometown of Columbus, Ohio when it plunked down $28.9 billion to acquire First Chicago NBD Corp. and create the fifth largest bank in America with $240 billion in assets—then turned around and moved into the latter’s Chicago headquarters. As for J.P. Morgan Chase, until December 31, 2000, it was two firms: J.P. Morgan, known for credit derivatives, fixed income, and loan syndication, and Chase Manhattan, then the third-largest commercial bank with a burgeoning investment banking unit. The two shared a long history. The definitive history of J.P. Morgan,

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Ron Chernow’s 700-page The House of Morgan, follows the firm from its founding in London by J. Pierpont Morgan during the robber baron era, when the bank played a central role in through modern times, the firm led the trend of combining commercial and investment

They’ll give you enough rope to hang yourself, but that’s what you want, right?

The Firm

financing the U.S. railroad system. Progressing

“”

banking. While J.P. Morgan grew on its own, Chase grew by merger mania, devouring Chemical National Bank, the Manhattan Company (later the Bank of the Manhattan Company), the Chase National Bank, the Hanover Bank, Phoenix Bank, the Brooklyn Trust Company, and Manufacturer’s Trust Company among others, with acquisitions dating back to 1799. In 1930, Chase National become the world’s largest bank in terms of assets and brought the Rockefeller family into the business by merging with Interstate Trust and Equitable Trust (whose president, Winthrop Aldrich, was David Rockefeller’s uncle). By late 1999, Chase was a powerhouse consumer bank and budding investment bank, although it hadn’t broken through to the first tier of I-banking. The J.P. Morgan merger solved this problem and was hailed a winner by analysts who expected the combined firm to grab leadership in both underwriting and commercial banking. Of course, nobody expected the dot-com crash that killed the IPO market, the 9/11 attacks that ratcheted up one of the worst I-banking recessions ever, the lost loans to Argentina, and the damning implications of fraud and heavy fines in the Enron mess. As a result, earnings were hammered and went from $5.7 billion in 2000 to $1.7 billion in 2001 to $1.66 billion in 2002. The firm’s ranking in Fortune’s “Most Admired Banks” plunged from as high as number four in years past to number 40 this year, and the past year’s headlines haven’t been good—“J.P. Morgan and Citigroup Agree to Pay $300 Million to Resolve Fraud Allegations,” “Complex Trades Help Mask Enron Debt,” “Moody’s Cuts J.P. Morgan’s Long-Term Debt Rating; Job Cuts Ahead.” Still, this company

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is a force of nature, the second-largest U.S. bank, a global financial services behemoth with operations in more than 50 countries ranked number 75 on the Fortune Global 500 list of biggest companies. It is a market leader in offering corporations a complete platform of capital raising, advice, trading, and risk

The Firm

management services spanning commercial and investment banking. And despite 4 years of nonstop challenges—the tech-boom collapse, a mega-merger, the shock of 9/11, the slumping economy, and a mega mega-merger—the fire burns as brightly as ever. The firm began 2003 with two consecutive quarters of blockbuster profits and has been rolling ever since. During the tough times of 2001–03, the company worked hard to cut costs— effective for the bottom line, but not necessarily good news for MBAs and college grads. Despite some lingering turmoil from the J.P. Morgan–Chase merger and the Enron fraud revelations, the company’s awesome power and cachet remain intact: Fortune’s “Global Most Admired Companies” list ranked the company 26th in 2003 and 21st in 2002. The sizable Enron penalties notwithstanding, JPMC’s global reach and offerings in bond and equity underwriting, loan syndication, credit derivatives, and M&A, and its ability to extend credit from the commercial banking operations, were undiminished. With the Bank One merger turning JPMC into the only bank that can go toe to toe with giant Citigroup, its power seems unlimited. That’s the consensus of the media and most analysts, at least. The announcement of the $58 billion merger was widely lauded as a perfect fit. It created a combined bank that is large and powerful in a wide variety of businesses in which one or the other of its former component parts was undersized or weak. “Their strengths and weaknesses match up almost perfectly,” said Thomas Brown, an independent analyst with Bankstocks.com.

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The deal is a case of déjà vu for former Bank One CEO Jamie Dimon, now J.P. Morgan president, who will run JPMC in 2006 when J.P. Morgan CEO William Harrison retires. Dimon and his mentor Sandy Weill made virtually the same move at Travelers Group 5 years ago, when the brokerage, investment banking,

The Firm

and insurance conglomerate they had built over the previous decade bought retail titan Citigroup. That merger created the first giant in both full-service corporate and retail banking; J.P. Morgan/Bank One will be the second, with Bank of America quickly moving into this class as well.

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The Bottom Line The Firm

The bad news—3 years of falling stock prices, reputation sullied in the Enron debacle, profits socked like everyone else’s in the financial services sector—is now ancient history. JPMC has reeled off six solid quarters—the first few a result of cost cutting and low interest rates and the rest due to a rebounding economy. Furthermore, the old cultural friction—the problem of melding the blue-collared Chase staffers with the blue bloods from J.P. Morgan—has been superseded by the Bank One mega-merger. In particular, the retail side should see fast growth because Dimon wants to buy more banks and blanket the nation with branches. He promises to do more retail deals: “I would love to fill in the gaps across the nation by buying more banks,” he told Fortune. “Banking is like retailing. If I’m big, I can give you more. Look at Wal-Mart. It’s all about your sales per square foot, how many mortgages, credit cards, and car loans you can sell through the same branch.” The new J.P. Morgan’s second pillar, investment banking, also looks solid— finally. In late 2000, Chase paid a huge price—$34 billion—to buy J.P. Morgan and become a player in investment banking. But 3 months later, the capital markets tanked and profits followed. The company made big pre-crash bets on technology and reckless, cheap loans to a rogue’s gallery of telecom and energy companies, and reaped giant fees by loaning hundreds of millions to Enron and disguising the loans as purchases of energy assets. Ultimately the bank paid a $135 million fine to the SEC for its role in the Enron fraud. But as the economy righted, so did JPMC. Profits jumped from $1.7 billion in 2002 to $6.7 billion last year, an increase of 300 percent, while the stock has doubled and tripled from the $15 price of late 2002. In the past, J.P. Morgan

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was a power in derivatives and debt, but a weakling in investment banking. That’s quickly changing as corporate customers move to one-stop shopping for everything from IPOs to cash management to lines of credit—right up J.P. Morgan’s alley. This year it ranked fourth in global equity underwriting, up from 14th in

The Firm

2001. Despite old and new merger bugs that need to be worked out, some say JPMC is a blueprint for the future of financial services. You’ll work just as hard at JPMC as at any other I-bank, but you’ll have the prestige, long-term banking relationships, and strong capital structure of both banks behind you. If you relish the thought of a lot of responsibility (one insider says, “They’ll give you enough rope to hang yourself, but that’s what you want, right?”) and you’re willing to play by traditional rules and put up with some bureaucracy, J.P. Morgan Chase could be the right place for you to build a long and lucrative career.

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Industry Position The Firm

Although J.P. Morgan Chase fell off slightly more than the rest in 2002, losing ground in seven of nine categories, its position stabilized in 2004 and is primed for a rebound with the merger.



J.P. Morgan’s First Half 2004 Industry Rankings

Category

2004

Rank 2003

Proceeds ($M)

Market Share (%)

Leader

Domestic debt & equity

5

5

149,996.9

8.6

Citigroup

U.S. debt including

4

5

141,114.3

8.6

Citigroup

U.S. long-term straight debt

2

2

74,012.3

11.6

Citigroup

U.S. high-grade corp. debt

2

2

46,911.4

14.4

Citigroup

U.S. IPOs

4

9

1,478.8

7.9

Morgan Stanley

Global bonds

4

5

21,293.3

8.0

Merrill Lynch

Global debt & equity

4

4

209,593.7

7.0

Citigroup

Global asset-backed securities

4

2

34,438.7

7.7

Citigroup

Global long-term debt

2

3

116,946.6

7.4

Citigroup

MBS ABS & tax munis

Source: Investment Dealers’ Digest, 8/04.

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Institutional Investor Survey Rankings 2003 All-America Research Team In this survey of equity analysts, J.P. Morgan Chase placed eighth, up from 11th

The Firm

in 2002.

2004 All-Europe Research Team J.P. Morgan Chase ranked ninth, compared to eighth in 2003, ninth in 2002, and eighth in 2001.

2004 All-Japan Research Team J.P. Morgan Chase placed twelfth, down from 11th in 2003, tenth in 2002, and eighth in 2001.

2004 All-Asia Research Team J.P. Morgan Chase was rated fourth, down from third in 2003, and up from sixth in 2002 and 2001.

2003 Global Research Team J.P. Morgan Chase ranked seventh, up from eighth in 2002 and 2001.

2004 Latin America Research Team J.P. Morgan Chase ranked seventh, down from fifth in 2003, first in 2002, and second in 2001.

2003 All-America Fixed Income Research Team J.P. Morgan Chase ranked third, down from second in 2002.

2004 All-Europe Fixed-Income Research Team J.P. Morgan’s European economics team placed first for the third year in a row.

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Other Survey Rankings Universum MBA Survey 2004 Universum Communications polled more than 4,000 business students from 40

The Firm

top U.S. universities on their ideal company to work for after graduation. In this popularity contest, J.P. Morgan Chase ranked 30th on the list in 2004, down from 24th in 2003.

Fortune’s “Global Most Admired Companies” J.P. Morgan Chase ranked 26th in 2003, moving from 21st in 2002 and 34th in 2001.

Loan Market Week’s “Best Trading Desk Survey” In 2003, J.P. Morgan Chase won best par trading desk and best overall trading desk, and finished second in distressed markets. In 2002 and 2001, it swept all three awards replacing perennial winners CFSB in par and Goldman Sachs in distressed.

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Organization of the Firm The Firm

View from the Top J.P. Morgan Chase does business in two areas: global financial services/investment banking (grouped under the J.P. Morgan name) and retail/consumer banking (grouped under the Chase and Bank One names). Since the 2000 merger, J.P. Morgan Chase has used Chase’s Park Avenue address as its headquarters. With the July 2004 merger, Bank One operations will continue to be run from its Chicago offices. J.P. Morgan Chase is publicly traded on the big board under the symbol JPM. Virtually all of Morgan’s business divisions are global. Its executive committee includes the chairman and 14 executives. In addition to the board of directors and executive committee, the firm maintains an international council, a national advisory board, and a regional advisory board. There is also a community advisory board for housing, economic development, and faith-based human services.

View from the Middle J.P. Morgan Chase comprises five business units, four under the J.P. Morgan umbrella and one under the Chase umbrella. LabMorgan, the firm’s e-commerce branch, was phased out in late 2001.

Investment Banking With 2003 revenues of $14.44 billion (up 15 percent from 2003, nearly reaching 2001 levels of $14.9 billion), I-banking is J.P. Morgan Chase’s most lucrative

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business. The investment banking unit offers corporate strategy advising and consulting, raising and placing capital (debt and equity underwriting), making markets in financial instruments (fixed income, treasury, equities), and risk management services. Chairman Harrison has stated that JPMC’s investment bank

The Firm

“has four powerful advantages: a huge client franchise, broad product capabilities, global presence, and intellectual capital.” He adds that the “success of our merger integration efforts” gives JPMC’s I-bank the ability to deliver the “whole firm” to clients, a uniquely broad array of products, services, and markets that position this high-return business well for the inevitable rebound.

Treasury and Securities Services J.P. Morgan Chase’s Treasury and Securities Services (TSS) unit delivers financial information and transaction processing services to corporations, financial institutions, and government entities around the world. The unit is split into three businesses: J.P. Morgan Institutional Trust Services, J.P. Morgan Investor Services, and J.P. Morgan Treasury Services. This business unit had mixed results in 2003, seeing a rise in revenue to $3.992 billion from $3.892 billion in 2002, a drop in earnings from $621 million in 2002 to $520 million, and higher operating overhead, up 81 percent from 77 percent.

Investment Management and Private Banking This unit, known as IMPB, comprises several businesses: J.P. Morgan Fleming Asset Management, which is a global asset manager to governments, corporations, endowments, foundations, and individuals in Europe; BrownCo online brokerage services; J.P. Morgan Retirement Plan Services for retirement plan administration and consultation; and J.P. Morgan Private Bank, which offers advice and customized solutions to wealthy individuals around the world. The company’s preeminence in private banking, international mutual funds, and institutional investing in core and alternative assets positions it among the world leaders in

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active asset management. With falling markets reducing annual expenses by more than $500 million in the past 3 years, management sees considerable potential in this business group as financial markets stabilize. Results were flat in 2003, with operating revenue ($2.878 billion in 2003 to $2.839 in 2002),

The Firm

operating earnings ($268 million in 2003 and $261 million in 2002), and overhead ration (84 to 83 percent) barely changing.

J.P. Morgan Partners JPMP is the firm’s global equity organization, working in private equity investing to provide companies equity and mezzanine capital financing. In the 2002 annual report, Chairman Harrison stated that the parent company is “acting to reduce the impact of JPMP on the firm’s overall results”—from 23 percent in 2001 and 20 percent in 2002 to 10 percent in 2003. In other words, this business unit is gearing down; therefore, opportunities for a newly minted MBA or undergrad appear to be declining.

Chase Financial Services The Chase Financial Services unit is a major provider of banking, investment, and financial services to consumers and small- and middle-market businesses through channels such as branch banks, ATMs, and the Internet. Its largest revenue streams are mortgages, credit cards, and auto loans. It also serves as a full-service bank for consumers and small and medium-sized businesses through Chase Regional Bank and Chase Middle Market. After a breakout year in 2002 with large increases in deposit banking customers and credit card account bases, Chase carried on in 2003. Operating revenue rose to $14.632 billion from $13.426 billion and operating earnings were up to $2.495 billion from $2.320 billion.

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View from the Bottom Despite a wide array of career choices at J.P. Morgan Chase—now even wider with the Bank One merger—the bank expects you to zero in on a chosen area

The Firm

fairly quickly. Insiders say it’s smart to be fluent in the firm’s different businesses, so do your homework before applying, and certainly before interviewing. Morgan recognizes that having so many options can create confusion, particularly if applicants are not familiar with the subtle differences between groups or functional disciplines. Recruiters say they describe their groups in detail and provide accurate job descriptions during on-campus presentations, and the same information is available in print materials and on the firm’s website. If you have questions, recruiters recommend you corner them for one-on-ones at recruiting events. To further assist you in deciding where you belong in the organization, the firm publishes a comprehensive booklet for undergrads and MBAs that is available at www.jpmorganchase.com. Make this a mandatory read if you plan to apply.

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On the Job • Investment Banking • Sales and Trading (Markets Group) On the Job

• Investment Management (Asset Management Group) • Private Banking (Asset Management Group) • Equity Research (Markets Group) • Internal Consulting Services

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Investment Banking J.P. Morgan Chase focuses on developing long-term relationships with clients who will need the firm’s services for a variety of finance-related issues. JPMC helps companies and governments raise money to fund expansion, purchase businesses, or meet other strategic goals. This is accomplished through debt and equity underwriting, including initial public offerings, loan syndication, and the occasional commitment of JPMC’s own capital. The variety of day-to-day

On the Job

projects can involve anything from helping a company develop a 5-year financial plan to analyzing a potential acquisition or assessing the currency risks of a multibillion-dollar loan for a foreign government. JPMC analysts and associates also assist in managing underwritings and financing and negotiating deals.

A Day in the Life of an Investment Banker

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7:30

Oops. Slept in a half-hour too long. But do I frantically bolt from bed? Hell, no. I’ll probably be at the office till 9:00 or 10:00 p.m. Again.

8:30

See Bill in the elevator and chitchat about his kids, wife, and dog. Frankly, I’m not so fond of Bill. But he’s on the team, and this job’s all about teamwork. I’m working on four deals at once, with four or more people on each. He’s one of them—along with a senior banker, a vice president, an associate (yours truly—an MBA hire), an analyst (typically an undergraduate), and maybe some others. Can we all get along? We have to.

8:45

Get up to speed on the news, the market, overseas scuttlebutt. Scan newspapers for anything that might affect deals number one and two. It’s more than being current—it’s being smart. Then scramble to get stuff done before the bosses get in.

9:30

Call the team’s analyst. Get me the charts, man. How’s that analysis going? He seems to bristle at my urgency. Get used to it, rookie. No

time to check his numbers, but I will later. Always do with the new guys, just so I know who I can count on. 10:00 Meet with team number three to talk about the pitch I’m making to the client in a week. Key pieces of the pitch book—the 100-page tome I put together on each deal—are still missing.

“”

I like the autonomy. If you see a problem, you can take the initiative to fix it. You usually don’t need clearance from management to do things. On the Job

11:30 Deal number four. Conference call with VP and client company. A lot of presentations to prepare. Madly scribble notes on my legal pad. Go through one of these a day, it seems. International Paper ought to thank me for keeping them in business.

12:00 Food run. Literally, run. No leisurely Hollywood two-martini sit-downand-shoot-the-breeze for 2 hours. Food to me is merely gas in the tank. Gotta keep the engine running. Wolf down a couple slices of pizza at the cafeteria. There’ll be time for a real meal next year. Next decade. 12:30 Put together final marketing materials for deal number three. Still some small mistakes. There are always some small mistakes. Sometimes they just seem to hatch overnight all by themselves on final, proofed documents. 2:00

Back to deal number four. Review charts, make changes for the MD, the managing director, based on new numbers from the client.

3:00

Send new projections to lawyers and discuss—with authority. After all, I did all the grunt work on this one, so no one knows it better than me.

4:00

Some last-minute phone calls before people go home—industry experts, senior managers. They get to kiss their stay-at-home wives, sit down in the La-Z-Boy, pet the dog, cut the lawn. I don’t have a lawn, and I don’t remember what sundown looks like anymore.

5:30

Now the real work begins. I dive into research on deal number one— SEC documents, press releases, etc. Put together a financial model for deal number two. Make sure that all the numbers flow. Run various scenarios for client’s proposed acquisition.

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7:00

Boy Wonder pops in with previously agreed-on dinner: Ethiopian take out. Love that stuff—eat it with your hands. Only one problem: sticky keyboard.

8:00

Input changes to the pitch book from MD’s Post-it notes. Amazing how much he can scrawl on one note.

9:30

Work with analyst on changes. Check merger models.

On the Job

10:00 Outta here by 10:00 p.m. again. Third time this week. Feels great to walk out the door before everyone else goes to bed. But better not be too obvious. They might think I’m slacking.

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Sales and Trading (Markets Group) JPMC has an active presence in the financial markets, both as a market maker and a position taker. Surprisingly, given Morgan’s traditional banking roots and conservative outlook, trading accounts form the largest portion of its revenue. This has made some research analysts and investors nervous, and the company

On the Job

has recently increased disclosure to alleviate concerns. The firm is particularly active in foreign currency, interest rate swaps, and derivatives, and it prides itself on its deft management of these high-risk instruments. Retired Chairman Dennis Weatherstone began his career as a trader, so JPMC sales associates and traders enjoy a bit more prestige than they might at other old-line banks.

Day-to-Day Tasks • Selling, selling, selling • Interpreting research recommendations for clients and advising them on market conditions • Developing new institutional accounts • Helping clients develop trading, hedging, and investment strategies • Coordinating Morgan’s conferences and client presentations • Schmoozing with clients after trading hours (Someone has to do it!) • Watching the markets on behalf of clients • Answering calls from clients—at first you can’t do anything, but pay close attention, learn the lingo, and then begin to fly solo on carefully chosen calls • Working with traders to check trades for accuracy and completion—one missing zero means your job

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• Collecting market data and information for traders to present to clients or prospects • Acting as a liaison (read: gofer) between traders, research analysts, and clients • Fetching coffee, lunch, or anything else somebody wants—don’t worry, everyone had to do it at some point • Studying hard for the Series 7 exam so that you can do more than put everyone who calls on hold

On the Job

A Day in the Life of a Salesperson 5:30

Hit alarm. I can sleep in when I’m 80. In the sales game, the early bird catches the worm—and gets to go home by 6:00 p.m.

6:30

The office. The sound of silence. Hard to believe this beehive can be so quiet. Ideal time to get up to speed—the news on Bloomberg, voice mail, e-mails, the Journal, the overnight trades. Gotta be ready to hit my most important people early.

7:30

Morning status meeting to learn about our exposure—what’s hot and what’s not. Want to punch one of the managing directors when he starts pumping bond X, saying we need to sell $100 million worth. Listen as research analysts make their pitch. Look around: No one has a clue about how to sell bond X better and faster to more buyers.

8:15

Conference call with London. Then, quick call to researcher to get educated on the basics of deal Z. He dazzles me with a blizzard of numbers and jargon—half of which goes over my head. Slow down, man—I have to sound like I know all this stuff cold.

9:00

It’s showtime! Market opens. Hit the phones. Close sales.

10:30 Watch markets. Autos. Oil. Gold. Take brisk walk around trading floor. 11:00 Client wants more information on deal Q that I’ve been pitching. It’s simple—but he wants reassurance. “Why do I really want to do this, actually . . . ?” he asks. Sometimes people get wimpy when big money’s on the line. That’s why babysitter is part of my job description. 12:30 Lunch. Eat at desk. Some guys can duck out for eats—not me. It’s midday. Gotta stay in the action. Phone ringing in one hand, KFC in the other. Thank god for baby wipes.

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Who needs exercise? I get my runner’s high on the phone, calling and pitching and answering and taking orders and covering the receiver and yelling out to a trader to get our position on security Z. Never the same. Sometimes it’s dry as a bone. Sometimes it pours. Sometimes I love it. Sometimes I hate it. Sometimes it’s warp speed. Sometimes it’s a crawl. Sometimes I wonder: Can this be good for a person?

4:00

Market closes. Ahhhhh. It’s over. Lean back. Take a big breath. Let adrenaline drain. Get up, splash water on face, and grab a Hershey bar. Celebrate another day in the game, another day without a heart attack. In 5 minutes sit back down refreshed, gearing down, cleaning up. Polish off work left over from before market opening. Call CFO of a target company about its margins.

5:30

Gather for quick wrap-up meeting. Swap perfunctory 30-second war stories. Check with someone over in fixed income to understand why another client might want to swap debt for equity. Make him walk me through it slowly.

6:00

Roll up the carpet. Meeting friends and friends of friends (the ones who don’t work until 11:00 p.m., that is) for drinks. They’re more than friends, of course. They’re also potential clients, connected to clients, or just useful to talk to about their own work. This line of work is all relationships, ya know.

On the Job

1:30

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Investment Management (Asset Management Group) The investment management division manages the assets of major institutional clients—pension funds, mutual funds, insurance companies—on a global basis. The assets include debt and equity securities, currencies, commodities, and even real estate. They also cross borders to include developed and emerging markets.

On the Job

A career in investment management could take you in one of three directions: portfolio management, research, or marketing. You can further specialize in departments such as equity or fixed-income portfolios, real estate, mutual funds, or pension plans.

Day-to-Day Tasks • Learning the ins and outs of a particular asset class and identifying outstanding opportunities for long-term investing • Learning about portfolio management theory and techniques • Working with advanced analytics and portfolio-tracking software • Helping build long-term relationships with institutional clients (lots of phone work, occasional entertaining) • Prospecting for new management clients worldwide (lots and lots of phone work, no worldwide entertaining)

Key Responsibilities for Undergraduates • Collecting data and research for selected investment opportunities • Helping the management staff evaluate potential investments in different asset classes • Assisting with new prospect marketing efforts • Assisting in client accounts administration

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A Day in the Life of an Investment Management Associate Listen to the news as I dress. I need to help rebalance a portfolio’s interest rate risk for a client today. Not too surprisingly, nothing on the news is the least bit helpful. Make a mental note to check a piece I read in the Wall Street Journal that would actually be useful. Forget the mental note. Write it down in Palm Pilot.

8:30

Morning status meeting. Get an update on the foreign markets, news, and anything else that may affect client portfolios. Scribble when the senior guys start scribbling—some of these connections, particularly the overseas markets, don’t really connect for me yet.

9:00

Talk with the fixed-income research people to help decide on the appropriate maturities for a new bond fund. Evaluate the average yield to maturity of several similar portfolios so I have some benchmarks to work with.

On the Job

6:30

10:30 Meet with the portfolio management team to determine how much cash to invest and when for a big client. Everyone disagrees. My splendid consensus-building skills do not seem to be working this morning. 11:15 Read the legal documents outlining the client’s objectives and risk limitations. Risk limitations section goes on forever. 12:30 Lunch at desk. Read an article about sailing just so I can remember for a few minutes what summer used to be like. Think nice thoughts about the 40-foot ketch one of my MDs owns and sails every weekend. It will get better. It will. 1:00

Run various scenarios of interest rate risk on a hypothetical portfolio for the client.

2:00

Remember something about a new corporate bond issue that Morgan was underwriting and see if it makes sense in the portfolio. Call to find out how much of it might be available.

4:00

Meeting with prospective client. Run on about Morgan’s global reach to discover investment opportunities. Leave with no idea whether the client loves or hates the idea of buying global depository receipts for a corporation in India.

5:30

Check the net asset value of today’s portfolios now that the markets have closed.

6:30

Home and off to the park for Rollerblading. Try not to think about interest rate risk. Think about it anyway.

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Private Banking (Asset Management Group) Many firms on Wall Street have established private client services divisions, which are really retail brokerages for wealthy individuals. Since costs have already been sunk into establishing a trading floor and research department, it’s relatively inexpensive to broaden the client base by offering these additional services.

On the Job

The private client group at J.P. Morgan is unusual on Wall Street in that its services include fiduciary planning, investment management, and credit. Also, private client advisors are paid a salary rather than a sales-based commission. This difference supports J.P. Morgan’s claim to be “a firm with a conscience.” Yes, that’s a cliché, but Morgan has actually structured its compensation system to avoid any incentive for trades unless they’re in the clients’ best interests.

Key Responsibilities for MBAs • Meeting with clients to understand and assess their needs and to develop long-term relationships for the management of their investments • Advising clients on investment opportunities or changing market conditions • Monitoring individual portfolios or positions every day • Working with clients who require tax or estate planning • Planning and executing trades • Developing new accounts, primarily through referrals • Keeping your shoes shined, minding your manners, and remembering whose money we’re talking about here—it’s not yours

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Key Responsibilities for Undergraduates • Ensuring that all necessary legal documents are on file with the firm • Checking trade confirmations • Giving stock quotes to clients • Handling money and stock transfers • With as much grace as you can muster, doing a lot of other stuff that seems equally mindless and unworthy of your keen intelligence and fine education Some analysts support client advisors or product teams. Their responsibilities include: • Researching and synthesizing information on financial markets

On the Job

• Researching potential clients • Preparing materials for sales presentations

A Day in the Life of a Private Banker 7:00

Begin my day with the Wall Street Journal, and Les Echos if I’m feeling particularly awake. (One of my current clients has several holdings in the south of France. I have to be even more on top of what’s going on than he is—and he’s on top of things.)

7:30

Morning status meeting. Finish reading the paper while an analyst talks about a stock that’s of no interest to me. This doesn’t really work since I always have to be paying fairly close attention in case they start talking about something that matters. Inevitably, they do.

9:00

Markets open. Review the tickets for today’s buys and sells. Put the prices on the tickets and let ’em roll.

10:30 Begin contacting my clients. These are not folks who need to arrive at work early. And if they do, they don’t want me bothering them. I prepare my admirably brief and cogent buy recommendation. (Basically an improved version of what one of the senior analysts said in the morning meeting.) My clients usually do whatever I suggest—incredibly, endlessly gratifying—so out of ten calls, I reach seven, and six agree to buy shares.

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On the Job

12:00 Lunch with a referral at her private club. She’s wearing a velvet headband and pearls. I gear myself up for a very polite tutorial.

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1:30

I was wrong. She knows a lot more than I do, and she’s not much interested in my opinions. If she decides to bank with Morgan—and that’s still an if—she will be calling me with the buy recommendations.

2:00

Work on developing a portfolio for a new client’s family trust and begin preparing for a presentation.

3:00

Read through more new reports from equity research on stocks in my clients’ portfolios. Curse the fact that a stock I’ve been accumulating for several clients has been downgraded. Take a deep breath and start making the calls.

5:00

Review the markets and confirm the day’s executions. More calls.

6:00

Head to the newsstand for an article in Barron’s on the new tax law and how it will affect wealthy individuals. Read it twice on the train home. Tax law is a beast. Put it aside till tomorrow.

Equity Research (Markets Group) There are two types of equity research in the investment business, and both are found at J.P. Morgan Chase. The main body of research is on the sell side. This does not mean researching stocks that should be sold. It refers to the investment advice an investment firm

On the Job

issues to its institutional and individual clients—whether to buy or sell. (What the firm is actually selling is its ideas, which are built into a client’s transaction costs.) Senior analysts generally follow an entire industry (e.g., health care or airlines) and supply comprehensive analysis on company fundamentals such as earnings forecasts, competitive positioning, or the impact of legislation on a business. Research also supports Morgan’s other areas by providing macro- and microeconomic analysis of world economies and bond markets. This type of work includes both writing and valuation, and many senior analysts view their jobs as separate from the rest of the firm—they are running their own business, marketing their ideas, and convincing people to act on them. Investment groups hear these ideas at morning status meetings and via written reports, and they may or may not be convinced. Clients generally receive this information secondhand, although they occasionally receive and act on reports independently. Morgan also manages portfolios for institutional clients and trades for its own account. To support these activities, Morgan has a separate group of buy-side analysts who look for investment opportunities not covered by the sell side. This buy-side research may extend to emerging markets or even privately held companies and is used exclusively by Morgan’s money managers. There is generally little client contact on the buy side, since most work is with internal portfolio managers.

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Key Responsibilities for MBAs Sell side: • Analyzing and evaluating companies within an industry and keeping abreast of industry trends • Conducting financial analysis, creating forecasts, and speaking with company management • Writing reports and making purchasing recommendations Buy side: • Conducting research on potential investments for a specific fund or portfolio

On the Job

Key Responsibilities for Undergraduates Both buy and sell sides: • Preparing and updating financial models • Analyzing industry trends and maintaining database of relevant information • Assisting in writing and circulating reports to clients or portfolio managers

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Internal Consulting Services This new area will hire the most undergrads this year. New recruits will have projects in auditing, human resources, financial analysis, operations, and technology. Assignments for internal consultants will vary. A financial analyst might determine the profitability of a new product or service, an audit consultant might review the trade and settlement procedures in a trading department, and a technology consultant might reengineer the way information flows between two

On the Job

operating groups. A generalist could work on projects across several disciplines.

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The Workplace • Lifestyle and Hours • Culture • Workplace Diversity • Travel • Compensation, Vacation, and Perks The Workplace

• Training • Career Path • Insider Scoop

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Lifestyle and Hours No matter the company, investment banking has always been a good job for workaholics, and every I-banker should expect life to revolve around work. Pulling an occasional all-nighter is not uncommon, and checking voice mail frequently during vacations is part of the drill. Corporate finance types can expect to log 70 to 90 hours a week, and more during busy periods. That’s right—at best that means five 12-hour days, with 5 hours each on Saturday and Sunday. During the workday, the pressure level can be high—especially when markets are active or before a big deadline. Even though many people dream of investment banking with dollar signs in their eyes, you should not pursue this career just for the bucks. The competition can be ruthless, and your personal life will suffer. Insiders tell us that the lifestyle is simply not worth it unless you really enjoy the work.

The Workplace

The markets staffs (salespeople and traders) work about 60 hours a week, with little or no office time on weekends, but they can expect their lives to be more intense during market hours. Private bankers’ schedules also revolve around the markets, though they may call clients late at night or whenever they’re most likely to reach them. Although the day starts early, many private bankers are able to leave after the markets close in the afternoon, and they rarely go in on weekends, giving them a workweek of about 50 to 60 hours. Equity research and investment management folks tend to work long hours, though perhaps not quite as long as the bankers. Consumer bankers on the Chase side reportedly have the sanest work schedules—many insiders say their workday is 8:30 a.m. to 6:30 p.m. Travel is usually squeezed into the off-market hours, making the workweek that much longer. Undergrads joining the internal consulting services program will usually have a regular corporate workweek, though not before a major project deadline.

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Culture Mergers happen. No one expected elitist J.P. Morgan and down-to-earth Chase to seamlessly blend overnight, but top management is satisfied that this immense, new 100,000-employee company is on its way to cultural accommodation. Even if each division looks at life a little differently, they are all bonded together by high stress, long hours, and a company-wide commitment to philanthropy and social responsibility. Last year, the J.P. Morgan Chase Corporate Challenge donated $350,000 to two dozen charities. Community Development financed $1 billion in affordable real estate loans and mortgages in 2002. It also sponsors a free Latino concert series in New York. Still, the 3-year merger is good conversation fodder. Most seem to agree that the integration of Morgan and Chase was smooth, especially at the junior level. A decided team culture helps. “This is not a star culture. Our model is a team

The Workplace

model—the atmosphere is collegial. If you don’t operate as a team, the model breaks down. People are rewarded for teamwork,” says one insider. Still, Morgan is traditionally more elitist than Chase, and that contrast has electrified watercooler talk since the merger. “Some Morgan people have this manager from Chase. On paper, the manager’s background probably doesn’t look as good as the Morgan people’s, and that kind of bugs them. That kind of stuff,” says an insider. One recent development to further bolster the move toward a single JPMC culture is Leadershipmorganchase, a program created to redefine culture around teamwork and to identify future leaders within the firm. “It sounds like it could be some internal marketing gobbledygook, but it’s actually pretty cool,” says one insider. Insiders do feel they’ve got some leash to play with. “I like the

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autonomy. If you see a problem, you can take the

“”

This is not a star culture. Our model is a team model— the atmosphere is collegial. If you don’t operate as a team, the model breaks down.

initiative to fix it. You usually don’t need clearance from management to do things,” says one. Another says, “It’s an open-door culture.” The culture also emphasizes doing right by the client rather than focusing on commission. Client service teams, which offer special products to clients, discourage petty competition between different groups. One insider says, “It’s not cutthroat. People like and respect each other here.” That attitude helps keep

the firm’s client relationships strong. The firm’s heritage is rich in both senses of the word: Both firms have an oldschool, old-money sensibility. One client, fortunate enough to have a grandfather who struck oil, claims that J.P. Morgan asked him and his cousins to submit a detailed family history before it would take them on as clients. J.P. Morgan Chase is also very international and cosmopolitan. After all, the

The Workplace

original Morgan firm was founded in England. For many banks, being global simply means having a presence overseas. At J.P. Morgan Chase, it means having the rest of the world’s elite come to work with you. You won’t have to relocate to Denmark or Thailand to find yourself working with people from those countries. Morgan knows international markets and will give you the opportunity to learn them, too. As you help structure a bond deal for a South American telecom company, you might be using a recently completed Swiss offering as your model. While many JPMC folks come from moneyed backgrounds, one thing we hear about consistently is the down-to-earth attitude of its recruiters. “They want to see how you’ll get along with people, so just relax,” says one insider. You may actually find that congeniality is the most common underlying cultural attribute at J.P. Morgan Chase.

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Workplace Diversity J.P. Morgan Chase rates high for diversity. In Fortune’s “Best Companies for Minorities” ranking, JPMC ranked 43rd, with 41.5 percent of the firm’s workforce being nonwhite (up from 41.4 percent in 2002). That includes 7.6 percent Asian (up from 7.5 percent), 21.2 percent African-American (down from 21.8 percent), 12.2 percent Hispanic (up from 11.1 percent), and 0.4 percent Native American (unchanged). The percent of nonwhite officers and managers rose to nearly 30 percent. Furthermore, minorities represent virtually half of new hires, up 10 percent in the last 2 years. These numbers represent further substantial gains for minorities over the past few years at JPMC, whose minority hiring statistics were already impressive. The company has developed formal recruiting relationships with historically African-American colleges including Florida A&M University in Tallahassee, Howard University in Washington, D.C., Morehouse College in Atlanta, Spelman College in Atlanta, and Chicago State University

The Workplace

in Chicago. Fortune credits the boost in diversity to efforts from the top. President/CEO Bill Harrison chairs the Corporate Diversity Council, which meets with executives annually to review their Diversity Scorecard. Also, all employees must participate in one “diversity learning experience” each year. The company operates 60 workplace diversity councils, as well as employee networking groups, which include nearly every race, lifestyle, and sexual orientation. There are groups for women in six states and the United Kingdom. In addition, the firm has formal relationships with colleges and programs to recruit minority students. J.P. Morgan Chase is the first (and as far as we know, the only) investment bank to offer same-sex domestic partner benefits. This is still a bold move for any firm,

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not just a white-shoe firm like J.P. Morgan. (Of course, if you made it far enough into Ron Chernow’s The House of Morgan, you’d know that J. Pierpont Morgan’s daughter Anne Morgan was a more-or-less out-of-the-closet lesbian in 1908.) For more information on diversity at J.P. Morgan Chase, visit www.jpmorganchase.com/cm/cs?pagename=Chase/Href&urlname=jpmc/ about/mission/diversity.

Travel Travel demands vary greatly from department to department. On the invest-

The Workplace

ment banking side, employees take longer trips in order to market to clients, conduct due diligence, and run road shows on new debt or equity issues. However, it’s unusual in the first several years to travel more than every other week. In capital markets, staff may travel about 2 days every 2 to 3 weeks. In private banking, it all depends on where your clients are, and it’s likely that many will be local. People in global markets tend to stick a lot closer to the trading floor.

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Compensation, Vacation, and Perks J.P. Morgan Chase’s 2004 starting salary range is mostly in line with or slightly higher than that of other firms on the Street. While JPMC recruiting managers will not confirm salary figures, new MBA hires—before the poor economy hit—could expect to make about $75,000 in base salary, with a sign-on bonus and often a year-end bonus that could amount to a 40 to 80 percent premium above base. With the economic rebound, salaries and bonuses are reaching and exceeding those levels. Any year-end bonuses will vary significantly depending on individual achievement, the department, and the firm. For senior officers, bonuses can range from zero to multiples of base salary.

The Workplace

MBAs start with 4 weeks of paid vacation per year, and undergrads receive 3 weeks—though you’ll be lucky if you have the chance to take it all during the first few years. Insiders say the firm tries to be flexible, but the markets, the clients, and the deals don’t always accommodate. For bankers, a vacation without phone access is out of the question. Go ahead and get one of those advance discount airfares, though—most airlines only charge $75 to change the flights, and the firm may pick up the change fee. Morgan offers its New York employees an inexpensive, subsidized lunch in the company cafeteria. (It used to be free, but we all know there’s no such thing anymore.) Pizza Fridays and the like are common throughout the organization. It also supports a medical clinic in the office for employees to visit for ad hoc help or referrals. One insider says, “If you really need a day off for something, people will do whatever they can to make it happen.” Insiders also say that another perk is the ability to develop a global network of business and social contacts. The friends you make here will come in handy later on down the road, wherever your life takes you.

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Training J.P. Morgan Chase takes training seriously and values feedback about it. Training programs are frequently reviewed and adjusted according to feedback received from trainees. One insider says, “I was very impressed with the training I received. They flew me to New York several times, and the programs were really good. At my last firm, as soon as times got tough, training and people stuff went out the window. Not here.”

Undergraduates

The Workplace

Most analysts and trainees go through a brief 1- or 2-week training program when they join the firm. The program includes an orientation and instruction on financial basics, computer modeling, and other introductory issues. After that, it’s on to business-specific training programs and on-the-job experience. Interestingly, investment banking training at the firm is shorter than it used to be. In the old days of permanent hires, training lasted for 16 weeks and was meant to take the place of business school. Now that the firm expects undergrad hires to return to B-school after 2 or 3 years, the program’s intensity and length have been cut—though it’s still extensive and educational, with many B-school instructors participating.

MBAs Most new MBAs at J.P. Morgan Chase dive right into their group’s training programs. A bit like boot camp according to some insiders, these programs are designed to prepare Morgan soldiers for action on the frontlines by filling any remaining holes in their B-school education. Insiders say the programs are both fun and demanding—spur-of-the-moment happy hours and late-night testcramming sessions are equally important bonding experiences.

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Career Path The recruiting process is now fully integrated 3 years post-merger, although wholesale banking recruiting still falls under J.P. Morgan and consumer banking recruiting falls under Chase. The firm hires recruits from top undergraduate and graduate institutions each year.

Opportunities for Undergraduates Consumer banking undergrads usually stay in retail financial services for 2 or 3 years and then go on to B-school (or another job). Rotations and final placements occur in one of the following businesses: Chase Cardmember Services, Chase Home Finance, Chase Auto Finance, and Chase Regional Banking. On the investment banking side, undergrads are hired as analysts in the invest-

The Workplace

ment banking, investment management and private banking, or middle-market banking groups. In addition to learning the guts of spreadsheet programs, most analysts are happily preparing themselves to be MBA candidates. Even if you decide not to climb the Wall Street pyramid, the training should prove helpful in other endeavors.

Opportunities for MBAs Chase MBAs start as associates and may be promoted to vice president after 3 to 4 years. Your term as an associate seems to be a time for both you and Chase to test the waters. Insiders say that associates pretty much know if they’re a good fit for Chase by the 5-year mark. Many associates do go on to

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become VPs. The rest either opt for a position at another investment bank or change career paths altogether. Morgan hires MBAs in the same three areas in which it hires undergrads: investment banking, investment management and private banking, and middlemarket banking groups. In the past, employees tended to stay in the area they joined as new hires. But lately, Morgan is using its range of businesses—and the opportunity to switch gears within this range—as a selling point to junior people. You may also perform a variety of roles and functions within the group you choose.

Other Opportunities A third career area, corporate groups, comprises the finance and human resources groups. Finance analysts and associates support the J.P. Morgan Chase corporate CFO functions in activities such as corporate strategy, resource allocation, corporate development, business performance evaluation, management processes,

The Workplace

accounting policies, and external information strategy. Those hired by human resources work in hiring, staff development, compensation, and benefits.

International Opportunities J.P. Morgan Chase has a very strong international presence. The firm has offices around the world and actively recruits for them. Chances are good you can work abroad if you want to, especially if you speak one or more foreign languages fluently and are willing to wait for the right opportunity. Insiders say they feel they could get a foreign assignment if they wanted one, and many have worked with people who have lived all over the world while employed by J.P. Morgan Chase.

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Insider Scoop What Employees Really Like Client Comes First J.P. Morgan Chase has a reputation for putting its clients first. The firm believes that this approach ultimately pays off in long-term relationships. From an employee’s perspective, it’s nice to represent a firm with this reputation—a reputation that pays off when meeting new clients. One insider says, “It’s a pretty good business card to have when you are trying to meet a company for the first time—even more so outside the United States.”

Rubbing Shoulders on the Deal J.P. Morgan Chase’s relatively recent arrival on the investment banking scene is

The Workplace

another draw for many people. According to one insider, “There’s not the wellestablished hierarchy hanging over you that would be there in a firm with a longer history of investment banking. This gives younger people a better chance of getting more responsibility early.” Another insider says, “I don’t sense any kind of glass ceiling at all. My opinions are valued. You get more exposure to clients with Morgan’s fluid hierarchy, and once you master your responsibilities you get to work with senior people right away.”

Just Do What You Have to Do Even though you work long hours slogging through complicated business transactions, J.P. Morgan Chase attempts to excise aggravation by maintaining a very accommodating support staff. One insider says, “There’s a tremendous amount of resources here. I get to focus exclusively on being an analyst.” And

45

those at the professional level help each other out, too. Being able to call on a peer at any office worldwide always impresses insiders. Says one, “I can call some guy in London who worked on a similar deal that I’m working on right now, and not only will he not ask who the hell I am, he will talk with me and spend the time to help out, regardless. There’s a great exchange of information, so you don’t have to reinvent the wheel.”

Training Day(s) While most companies have slashed costs recently, J.P. Morgan Chase has left training alone. We hear reports of excellent training programs and off-sites, which are given on an ongoing basis. “I was really impressed with the training I got. When I started working, I got a lot of responsibility, but I felt prepared,” says an insider.

Meritocracy Insiders point to J.P. Morgan Chase’s fairness and the opportunities it provides for individuals to succeed. “This firm puts a premium on making opportunities

The Workplace

available for analysts and associates who show initiative in learning the business,” says an insider.

Universal Banking Model As purveyors of the full slate of wholesale and commercial banking services, J.P. Morgan Chase (like Citigroup) can offer junior employees a wide scope of professional opportunities. One insider says, “It’s a green field of opportunity, and if you position yourself well, there’s nothing keeping you from switching gears into another area.”

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Watch Out! Let Someone Else Have That One The brash, aggressive, independent risk taker may not be happy in the take-thelong-view J.P. Morgan Chase environment. One banker says, “Trading-oriented personalities would probably find a more aggressive firm to be a better fit.” Says another, “Superstar cowboys who burn bridges will not do well.” It may also be difficult for the highly focused individual to immediately pursue a specific field of interest. “If you’re gung-ho about Eastern Europe or some other special area,” says one insider, “it may take a while, and you’d be better off at a firm that will hire you for that.”

Big (Elephant) Deal Most of J.P. Morgan Chase’s deals are huge “elephant” deals. Although the fees help the firm’s bottom line, someone just starting out in investment banking will get less exposure to massive deal volume and the invaluable experience that comes from working fast and furious on deal after deal after deal. One insider

The Workplace

says, “I knew they (J.P. Morgan Chase) were building the I-banking practice, but I didn’t know the money was generated from elephant deals and proprietary trading. These huge transactions use a ton of people, are very high profile, and you only get to work on a small portion of it.”

External Relations Be ready to put up with snobbery and high-handed behavior from Morgan’s biggest long-standing clients. One insider diplomatically says, “Most clients maximize their fees, so to speak. Clients will get you for all you are worth. You are a financial services vendor.” Your job is to be firmly polite and politely firm, always with the idea that the firm comes first, not your particular sensibilities or beliefs. The client isn’t always right, but it certainly isn’t your job to correct him when he isn’t.

47

Secret Society As long as banking is about money, banks are going to hire rich kids to work for them. Some insiders talk of snobbishness of varying levels of flagrancy and say they find it disagreeable. “Some people are into the whole Ivy League thing. It’s just kind of annoying,” says an insider.

Communication Breakdown A couple of insiders have told stories of finishing a small project only to discover that their work was redundant. Says one,“It’s a problem with giving people the green light to do things, I guess. But I’ll take that over being micromanaged.”

Media Storm As oft-mentioned as it is in relation to Enron and other corporate scandals, J.P. Morgan Chase has more negative press to look forward to, at least in the

The Workplace

short term.

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Getting Hired • The Recruiting Process • Interviewing Tips

Getting Hired 49

The Recruiting Process MBAs and undergrads follow similar recruiting tracks at sJ.P. Morgan Chase. The format generally involves three rounds of interviews: The first is on campus, and the second and third rounds are at a J.P. Morgan Chase office. Early interview rounds will include someone from human resources. An on-campus interview may also include a younger professional, often a graduate of the school. Later rounds will include many people from the area to which the candidate is applying and a few senior people or team leaders.

Undergraduates For a very specific reason, the firm has formal recruiting programs only at selected colleges. It wants to be as selective as possible, so it only visits schools with selective admissions processes. This way, the school has already done some of J.P. Morgan Chase’s screening. If your school is not on Morgan’s roster, don’t give up. It will just take more initiative on your part. Recruiters will not encourage you to fly to New York just for an interview—it’s not cost-effective for them unless you’re a shoo-in for the job. Nevertheless, if you have a solid resume and you’re going to be in New York anyway, there’s a good chance you can get an audience. You could also try calling the appropriate contact at Morgan to say that you plan to be in New York on a certain day and that you

Getting Hired

would like to stop by to talk for a few minutes. The contact doesn’t need to know that you’re making a special trip! Business school students, and even more often undergrads, use company presentations and receptions as places to shop for a career. These are a great way to explore new professions and learn more about an industry. By the time

50

interviewing rolls around, however, you should be a bit more directed (or at least give that appearance), and you should know what area within the firm interests you. Many investment banks discourage candidates from applying to more than one area of the firm; J.P. Morgan Chase now allows multiple initial applications,

“”

It’s easier to get a full-time job than it is to get an internship [at J.P. Morgan Chase].

but you will have to reduce your target to one area by the second interview. So pick your pleasure, do your homework, and get focused early in the process.

MBAs At the MBA level, J.P. Morgan Chase is more concerned about finding career employees. One of the best aspects of an associate position is the training program. The program is good enough that associates occasionally take the knowledge and jump ship to another firm. J.P. Morgan Chase wants to know that if it invests in you, you will give the firm something in return. You can address this issue—less touchy than it was a few years ago, but still a sore point—by talking about potential career paths in the firm that appeal to you during your interview. This is also your moment to quietly and subtly demonstrate your unswerving and dogged loyalty to anything you sign up to do, but most especially to your employer.

Midcareer Candidates Getting Hired

If you’re already in the financial services industry, you probably have a pretty good idea of the various jobs within investment banking. Rather than going through human resources, try to network and get your foot in the door of your target division. Since HR dedicates great time and energy to the on-campus recruiting programs and entry-level hires, insiders say that midcareer types may

51

have better luck going direct. After all, if you were a hiring manager, would you want to weed through thousands of resumes to find that one perfect fit? Also, many bulge-bracket firms use headhunters for non-entry-level positions, so consider contacting one with a solid reputation in the industry.

Summer Associates J.P. Morgan Chase hires a number of first-year MBA students into its summer associate program. This is an excellent way to get to know the firm, and, if all goes well, get a full-time offer. As one recruiter puts it, “There is nothing that can beat a 3-month interview for finding the right fit,” and that goes for both the candidate and the firm. Though an internship is never a guarantee of future employment, 60 to 75 percent of J.P. Morgan Chase’s summer investment banking interns receive offers. There’s a downside to that high retention rate, according to a recruiting insider: “I’ll be honest. It’s easier to get a full-time job than it is to get an internship.” If you do receive an offer at the end of the summer but are interested in another area of the firm, J.P. Morgan Chase is flexible as long as there are openings. Insiders also say a summer associate position gives you more sway over your choice of location. All associates in New York may specify their areas of interest for assignments during the recruiting process. There is also a summer program for undergrads entering their senior year. Undergrads are hired into specific groups for a 10-week summer program and

Getting Hired

will learn about other areas of the firm while there. In addition to business assignments, the program includes formal feedback sessions, mentoring, presentations by other areas within the bank, and organized social activities. If you can bear to forgo the summer at the beach, this is a smart way to launch your career, full-time offer or no full-time offer.

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Interviewing Tips Insiders tell us that J.P. Morgan Chase has a very structured interview process. In the first round, you’ll meet with one or two people. This is like a one-andone free throw situation in basketball: If you satisfy the first interviewer, you have another (seemingly impromptu) meeting, probably with a senior person. Be ready for the weird experience of a video interview with people in New York. The second round is conducted in New York. In this series of five or six interviews, each interviewer targets a specific area for evaluation. Some test for analytical ability, while others delve into your quantitative skills through case interviews. • Understand the Wal-Mart analogy. Understand the scope of the size and services J.P. Morgan Chase offers. Know the details of the Bank One merger cold. • Know what makes JPMC different from the rest of the Street. In particular, have some knowledge of Citigroup and Bank of America, which are similar in size to JPMC and in the same league in terms of strategy. • Have a well-formulated explanation for why you want to work at J.P. Morgan Chase and not somewhere else. The more you can show that you have really thought about these reasons, the better. • Similarly, have a well-conceived explanation for why you want a career in investment banking, or whatever field it is you want to go into. • Be prepared to answer any finance question. “You know that investment bank guide? You should know that cold,” says an insider.

Getting Hired

• J.P. Morgan Chase is more receptive than many banks to a variety of backgrounds. While you certainly want to point out your strong quantitative and analytical skills, J.P. Morgan Chase may be the right firm to target if you have no prior banking experience. • Your analytical ability and interest in finance are necessary attributes for a JPMC job. However, recruiters tell us that the following are equally important:

53

interpersonal skills, decision-making capability, self-confidence, and ability to work under pressure with a lot of complex information. Be prepared during your interviews to demonstrate these qualities and have concrete examples from your past experiences ready. • J.P. Morgan Chase is definitely one place where it helps to talk to friends who may be new analysts or associates. Rumor has it that J.P. Morgan Chase has an online recruiting system where anyone can post (effusively positive) comments about you. Every little bit helps. • J.P. Morgan Chase interviewers always seem nice. This is a rare quality in investment banks in general, and even more so in investment banking interviews. Don’t forget, however, you are not there to chat with a friend, but to sell yourself. (They’re nice, but not that nice.) • Interviewers almost always leave time for you to ask questions. Be ready for the possibility that the full half-hour, or at least 25 minutes, will be turned over to you. Practice running your own interview, easily and without embarrassment, and you can turn this very much to your advantage. • You will most likely have one or two case interviews in the second and third rounds. If you have a friend who is interviewing with consulting firms, ask her to practice with you. It will at least help you get over any initial intimidation. If number crunching and financial formulas are not your strengths, try to think logically and use common sense. It’s not an efficient use of your time to try to cram a year’s worth of material into 2 days of preparation. • Stand up when people walk into the room. Wait for them to sit down before you do. Make lots of eye contact. If you’re male and your interviewer is female, err on the side of chauvinistic chivalry. Manners matter here.

Getting Hired

• Be ready to prove you’ve picked up the paper in the last day or so. Do you know what the Fed fund rate is right now? Why is Ford’s P/E ratio so much lower than Kellogg’s? Make sure you know how the market is doing the day you interview, and be familiar with any important economic news that may have been announced recently. • Examine your resume for weak spots and formulate a solid response to any that you find—they’ll more than likely query you on them. • Especially in early rounds, the interviewers will be relatively inexperienced, their egos fragile. Use this to your advantage.

54

• Good questions to ask interviewers: J.P. Morgan Chase and Citigroup are the pioneers of the universal banking model. What are the merits of this model, as compared to traditional investment banks such as Goldman Sachs? What is J.P. Morgan Chase doing to grow its M&A business? • Question to avoid: How much can I expect to make? (Or anything about compensation.)

Getting Hired 55

For Your Reference

For Your Reference • Recommended Reading • Key Numbers and People

57

For Your Reference

Recommended Reading “J.P. Morgan Chase to Lay Off More Workers” J.P. Morgan Chase & Co. said it will lay off more employees than initially expected in order to achieve almost $1 billion more a year in cost savings. The financial services firm originally anticipated the layoff of 10,000 employees after announcing it would acquire Chicago-based Bank One in a $57 billion deal. Now, J.P. Morgan Chase is increasing that number to 12,000 as it looks to come up with more ways to find cost savings for investors. By next year’s fourth quarter, J.P. Morgan Chase expects to save $3 billion per year as a result of the acquisition. “We are going to be saving annually almost a billion more than what we previously expected,” CFO Dina Dublon said. “The trade-off is pretty straightforward, and the incremental costs are pretty well distributed across the three areas we’re targeting—real estate, technology and people.” Jamie Dimon, the former Bank One CEO slated to take the helm of J.P. Morgan in 2006, has previously said many of those job cuts will come from attrition. There have already been a number of layoffs since the merger’s July 1 completion. Source: Associated Press, 7/21/04.

“J.P. Morgan Chase Reports $548M Loss” J.P. Morgan Chase & Co. reported a loss of $548 million for the second quarter after pumping up its reserves by $2.3 billion to cover the expected cost of litigation stemming from the Enron Corp. and WorldCom Inc. bankruptcies. Excluding the litigation reserve and a $60 million charge related to its merger with Bank One, J.P. Morgan Chase’s earnings for the second quarter would have been $1.81 billion, or 85 cents per share. That’s better than the 83 cents expected by analysts. William B. Harrison Jr., chairman and CEO, said that J.P. Morgan

For Your Reference

Chase “will continue to defend itself vigorously” in the legal cases. But, he added: “We have decided, after an extensive review, that our litigation reserves should be increased.” Source: Associated Press, 7/21/04.

“J.P. Morgan Chase and Bank One Report 2004 Second Quarter Results” Due to a litigation reserve charge of $2.3 billion (after tax), J.P. Morgan Chase reports a net loss of $548 million or ($0.27) per share, compared to net income of $1.83 billion, or $0.89 per share, for the second quarter of 2003. Bank One announced 2004 second quarter net income of $1.1 billion, or $0.99 per share, compared to $856 million, or $0.75 per share, for the second quarter of 2003. Since the merger occurred on July 1, 2004, second quarter earnings for J.P. Morgan Chase and Bank One are each provided on a stand-alone basis. Merger savings estimates have been raised to $3 billion. Source: BusinessWire, 7/21/04.

“J.P. Morgan Chase, Bank One Complete Merger” The two companies merged their holding companies, effective 12:01 a.m. July 1, 2004. The combined company will be known as J.P. Morgan Chase & Co. Bank One stockholders will receive 1.32 shares of J.P. Morgan Chase common stock for each share of Bank One common stock. J.P. Morgan Chase stock will continue to trade on the New York Stock Exchange under the ticker symbol JPM; Bank One stock traded for the last time June 30, 2004. Source: www.jpmorganchase.com.

“The Dealmaker and the Dynamo” At last, J.P. Morgan’s William Harrison has made a deal the market loves. Why? Because in buying Bank One, he’s bringing Jamie Dimon back to the big show, where he belongs. Source: Fortune, 2/9/04.

59

For Your Reference

“Bank One Sale Brings Angst, Opportunity” The $58 billion merger of Bank One Corp., one of Central Ohio’s largest employers, and New York–based J.P. Morgan Chase & Co. could end up being positive for Bank One’s Columbus work force experts in the financial services community said after the deal was announced January 14. The all-stock deal would create the country’s second-largest financial services firm, with $1.1 trillion in assets. Several observers said that Bank One has too much invested in Columbus to leave it to waste. “I think it’s going to be good for Columbus,” said David Meuse, former chairman and CEO of Banc One Capital Holdings Inc., Bank One’s merchant banking subsidiary. Source: Business First of Columbus, 1/19/04.

“Bank One/J.P. Morgan to Cut 10K Jobs Nationwide” J.P. Morgan Chase & Co. and Bank One Corp. plan to cut roughly 10,000 jobs from its combined 145,000-employee work force, executives said Thursday in interviews following the official announcement of their $58 billion dollar merger. Jamie Dimon, Bank One’s president and CEO, cautioned on the cable channel CNBC that the cost-cutting plan did not call for immediate job losses for employees. Source: Business First of Columbus, 1/12/04.

“Banks’ Complex Trades Helped Enron Mask Debt” What does it take to hide billions of dollars of debt from investors? For Enron Corp. it meant creating an intricate web of transactions, complete with offbalance-sheet entities, complex commodity trades and swap agreements, regulators say. Citigroup Inc. and J.P. Morgan Chase & Co. agreed to pay out $300 million to settle charges that they structured the complex deals that allowed Enron to hide debt and inflate cash flow before the company filed for bankruptcy protection in late 2001. Regulators say the deals at the heart of the settlement had

60

For Your Reference

one main goal—to mask the level of Enron’s debt. J.P. Morgan Chase, for example, essentially loaned Enron a total of about $2.6 billion under the guise of seven “prepay” deals between December 1997 and September 2001, regulators say. But to avoid reporting that amount as debt on its balance sheet, Enron and JPMC entered into a series of unspecified commodity trades, allowing Enron to receive money up front and repay it later with interest. Source: Reuters, 7/29/03.

“For Enron’s Bankers, a ‘Get Out of Jail Free’ Card” The irony is hard to miss. When securities cops announced a $300 million settlement from Citigroup and J.P. Morgan Chase & Co. for their roles in the Enron escapades, they said that putting the responsible bankers in jail would have been all but impossible. “We have to show intent to commit fraud, and we didn’t think we could show that here,” according to the Manhattan district attorney. Source: BusinessWeek, 8/11/03.

“Global Brand Scoreboard” 2002 was a rough year for J.P. Morgan Chase. Although it was valued as the world’s 31st richest company on BusinessWeek’s 2003 Global Brand Scoreboard, its brand value slumped 6 percent to $9.12 billion. BusinessWeek summarized JPMC’s current state: “Viewed by many as a banker’s bank, it suffered from corporate scandals and a slump in mergers and IPOs. Heavy exposure to derivatives is also a dark cloud.” Source: BusinessWeek, 8/4/03.

“J.P. Morgan Unit Set to Buy Bank One Business for $720M” J.P. Morgan Institutional Trust Services agrees to acquire Bank One Corp.’s corporate trust services business for $720 million, of which 10 percent is

61

For Your Reference

contingent upon business retention. The purchase, which is subject to regulatory approval and should close later this year, is expected to boost J.P. Morgan Chase’s outstanding corporate trust portfolio to more than $4.5 trillion. Source: Dow Jones Business News, 7/24/03.

“Bank Defends Enron Deal; J.P. Morgan Chase Official Called Disguised Loans ‘Innovative’” J.P. Morgan Chase & Co. regarded the financial mechanics of its secret energy trades with Enron Corp. and an offshore company as “innovative” and “proprietary,” a bank official testifies. The deals are at the heart of a suit by the secondlargest U.S. bank against 11 insurers that have refused to pay it $1 billion in surety bonds that guaranteed the trades against default by now bankrupt Enron. Source: Bloomberg News, 12/26/02.

“J.P. Morgan Picks IBM for Global Outsourcing Talks” J.P. Morgan Chase & Co. has chosen to negotiate exclusively with IBM for a sweeping technology contract worth more than $5 billion, a major potential win for the computer services giant and a blow to its embattled rival EDS, people familiar with the situation say. Under the terms of the 7-year, global deal, International Business Machines Corp. will take over the global computing operations for J.P. Morgan in a wide range of areas including retail banking, trading, and securities processing. Source: Reuters, 11/13/02.

“Short and Distort” Describes the psychology of negative information that hurt J.P. Morgan in the wake of the Enron debacle. Source: The New Yorker, 8/12/02.

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For Your Reference

“What, Me Worry?” Big banks like J.P. Morgan Chase have all but sidestepped major losses from telecom lending, putting the stress onto institutions such as pension funds and smaller banks. Source: Forbes, 8/19/02.

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance If you get hired, you will receive a copy of this book during training. Still, you might want to read it before you interview with the firm. Although the book is 700-some pages long, it is extremely readable and interesting. Source: Ron Chernow, Atlantic Monthly Press, 1990.

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For Your Reference

Key Numbers and People 

3-Year Financial Highlights (operating basis)

Total revenue ($M) Earnings ($M) Return on average common equity (%)



2003

2002

2001

35,126

31,053

30,392

6,719

3,384

3,802

16

8

9

Highlights for First Half of 2004, 2003, 2002 1st Half 1-Yr. 1st Half 1-Yr. 1st Half 1-Yr. 2004 Change (%) 2003 Change (%) 2002 Change (%)

Total revenue ($M)

18,535

1

18,377

17

15,788

n/a

Operating expenses ($M)

11,740

3

11,373

12

10,068

-6

Earnings before taxes ($M)

5,610

14

4,889

35

3,530

-1

Income taxes ($M)

1,880

13

1,662

36

1,201

-4

Net income ($M)

3,736

11

3,227

60

2,010

27

1.77

13

1.57

15

1.35

-5

Earnings per share ($)

Sources: J.P. Morgan Financial PR; WetFeet research and analysis.

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For Your Reference

Management Team William Harrison, Jr., chairman and CEO James Dimon, president and COO David A. Coulter, vice chairman Donald Layton, Chase Financial Services, Treasury and Securities Services Dina Dublon, CFO James E. Staley, head of Investment Management and Private Banking

Recruiting Contacts To find out what jobs are available where, how to apply, and to get updated information on recruiting, visit http://careers.jpmorganchase.com. There you can find descriptions of all positions and apply online. For help with your application, send a letter to: Undergraduates Campus Recruiting 277 Park Avenue, 36th Floor New York, NY 10172 To learn more out about J.P. Morgan Chase’s different business units, visit www.jpmorganchase.com.

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2005 Edition