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Di Iorio’s winning formula |
Di Iorio joined JPMorgan as an analyst at part of the new private bank. It was a good fit for Di Iorio, who was very keen on portfolios and financial markets. He admits he was “the kind of child who wanted to be involved in his parents’ first mortgage.” He brokered a car purchase for his family at the age of 10. “You want to know what the dollar/yen is at any moment? Phil knows it. To the fourth decimal point,” says John Duffy, who heads up the private bank in the US. “He keeps up with the markets incessantly on behalf of clients.” Di Iorio says he doesn’t sleep much but when he does wake up in the night, he will inevitably check the markets.
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In 1989 JPMorgan wanted to introduce a brokerage offering as part of its private banking build-out and was looking for internal volunteers to help. “I’d seen JPMorgan’s role as a custody bank and had seen the transactions passing through between the broker dealers and the clients, and saw no reason why we weren’t in that business,” says Di Iorio. It was a fascinating time – in the wake of the 1987 crash, the Latin America crisis and the savings and loans crisis – in a world where clients wanted a much higher level of engagement. “The brokerage business transformed how we interacted with clients, and growth was phenomenal,” he says.
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While the brokerage business was doing well, by 1999 however, the traditional private bank was losing money and clients. That was when JPMorgan brought in Jes Staley, who had been running the firm’s equity capital markets group, to take over the private banking business. Di Iorio had been ready to move to Merrill Lynch but Staley convinced him to stay. Staley, now a managing partner at hedge fund BlueMountain Capital, says: “When we first met, Phil and I had a long and frank conversation about how JPMorgan Private Bank could be turned around to become the best wealth management firm and what that vision would entail. Phil bought into that vision, and he and Mary Callahan Erdoes [CEO of asset management] have executed on that for 15 years, creating arguably the most impressive private bank in the world.” Di Iorio says it was the beginning of a new era for him, the firm and the team that worked together. He lists both Staley and Erdoes as his two role models. “Jes for the courage to move from the investment bank to the private bank and take on the responsibility of building this business and establishing the culture of client first. And Mary for her vision of what this business could become and her ability to motivate thousands of people and give them confidence to believe in the potential of this business.”
“I believed in the leadership and the vision,” says Di Iorio. “Jes set the foundation of creating a private bank that would be like the investment bank for the wealthy. It would give them access to the firm’s balance sheet. Access to ideas would be global in nature and offer the best private and public investment opportunities. And it would be supported by the talent and resources of the broader firm.”
Di Iorio was given the role of overseeing investment ideas and solutions for the private bank, and his guidance and focus on investment solutions have contributed to the private bank’s positioning today.
“We knew back then that the style of investment management was changing from a home bias to a global overview, and from the usual equities, bonds and cash portfolios to an absolute return focus that would include alternatives,” says Di Iorio. “We could see that pairing investment advisory with investment management was going to be key. All of that has to be wrapped with advice. It wasn’t going to be just about products.”
Today the bank has 1,000 people dedicated solely to looking for tactical opportunities and delivering ideas, and a top-tier CIO team of regional experts headed up by Richard Madigan. It means the private bank has become a leader in spite of its smaller size. Many of its peers only started making the shift to investment advice and allocation away from product sales two years ago.
In his role as CEO of the private bank, Di Iorio includes the investment ideas as a measure for his firm’s success. “Yes, I look at asset growth and net new clients and relative performance against our peers and market share. But I also look at innovation: are we bringing new ideas to clients? What are they? Do they make sense? Are they solving clients’ needs?”
Since Di Iorio became CEO in 2011, assets have grown 50% and net new clients have increased 23%. Those who work for or with Di Iorio say his work ethic and leadership style drive results.
He’s a likeable no-frills man having grown up in New Jersey where he still lives with his wife and three 14-year old boys. Janine Racanelli, chief executive of Ray Dalio’s family office and a former colleague of Di Iorio, says he has a way of doing the right thing and hiring people who follow that view. “He won’t tolerate behaviour that is not in line with clients’ interests, which is hard to do in a vast organization,” she says. Last summer the firm added more disclosures to clients to resolve accusations of conflicts of interests around investments.
Says Staley: “Phil personifies the values that one would hope for in a fiduciary institution like the private bank. I’ve seen him turn away business time and time again because he did not think it was in the best interest of his client. That level of integrity is rare.”
Di Iorio says the toughest challenge when hiring bankers is to find someone with the right character, who embodies the culture of their business. “That needs to come first, so often we’ve found that talent from our analyst and associate training programmes tend to be our most successful long-term employees.”
The loyalty of his employees is exceptional, say senior colleagues. “He drives for results, and when someone falls short he can give the tough message with a degree of sincerity that makes it manageable for people to receive. For that style and his overall integrity, people have tremendous loyalty to him,” says Staley.
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Phil personifies the values that one would hope for in a fiduciary institution like the private bank. I’ve seen him turn away business time and time again because he did not think it was in the best interest of his client. That level of integrity is rare Jes Staley, BlueMountain Capital |
Always acting within the clients’ best interests is a claim that many private banks make of their culture but few truly do. Philip Schlakman runs the family investment office PSQ Capital, a client of JPMorgan. He worked under Di Iorio between 1997 and 2008. He says: “The industry is full of smart intelligent people but it is also has some bad actors – some are motivated by their own business goals. The culture Phil has created at JPMorgan is about always doing the right thing.”
Duffy says Di Iorio manages to balance the triangle of clients, business and shareholders: “He does a great job of caring about all three and knows that keeping that balance is imperative to a solid long-term business.”
That balance is helped by his steady management style. Di Iorio is anything but gung-ho or short-termist. Rather he is moderate and measured. Former colleagues say he is often the voice of calm and reason in a room. “He wants the job done, but he wants it done properly. There is a faith that he instils in people by his being at the helm,” says Racanelli.
Teamwork is also at the core of Di Iorio’s leadership style. In the way he works with Erdoes, his investment teams and colleagues, and in the way the advisers are structured into teams around the client. “Phil suffers no fools, and you learn that quickly about him,” says Duffy. “He’s not looking for ‘yes’ men. He believes very strongly in a team working together with healthy debate and he gives you the confidence to do that. He inspires you to do a good job.”
Says Di Iorio of himself: “I want to hear the dissenting view, if there is one. It’s important to hear as many perspectives as you can. No one person can be a sole expert. People are at the table for a reason and I want them to contribute. And then after debate, you make a decision. Nothing frustrates me more than a meeting without a conclusion.”
Having worked his way up through the ranks, he is also conscious of the importance of reaching all employees where possible. “Of course I meet with clients. But you also have to walk the floors daily and provide support to the bankers that serve the clients, the analysts that support the bankers, and importantly our client services specialists who talk to our clients daily regarding routine transactions.”
So what have been the challenges and what are to come? Di Iorio says the sheer growth of the business has been the biggest challenge. “You need to have scale, but even as you grow your client base, you have to be able to provide customized solutions. Three or four years ago we saw that transaction volumes were off the charts; innovation was required from a technology and operations perspective if we were going to keep up with client demands. You have to anticipate for growth.”
I want to hear the dissenting view, if there is one. It’s important to hear as many perspectives as you can. No one person can be a sole expert Phil Di Iorio |
Innovation is his mantra, whether in looking at infrastructure, client experience or investment solutions. In November he spent time in Silicon Valley meeting potential partners and employees. “Technology innovation will be the decisive factor for any private bank with aims to be here in five years’ time,” he says. “Clients’ problems are more complex, and the digitization of parts of the industry need to be embraced fully alongside face-to-face interaction. The industry as a whole is behind. I like meeting with start-ups as they look upon the impossible as possible. That kind of mentality is helpful when looking to innovate.”
It’s clear that Di Iorio likes a challenge, and the newness of the business is one he still finds exciting. If he wasn’t at JPMorgan, he says he would be somewhere else doing the same thing – building and operating a business – but he’s quick to add he’s not going anywhere. “There is much to do here.”
