⚠ Fee Rates Have Been Falling for Twenty YearsModerate threat

JPMorgan Chase (JPM) — threat to the moat

Assets can grow 18 percent while revenue grows far less, because the industry's price per dollar managed has only ever moved one way.

The asset management industry's revenue per dollar has been in structural decline since index funds became cheap, and no manager has reversed it.

How a fee rate erodesAssets migrateto index productsRevenue perdollar fallsAUM grows,revenue grows lessA 40% ROEattracts more of itJPMorgan's own filing warns clients may shift into products that generate lower revenue.
Watch revenue growth against AUM growth; the gap is the fee rate talking.

The mechanism is simple and relentless: assets migrate from actively managed products charging perhaps 70 basis points to index products charging three or four, and the manager's revenue falls even as the assets grow. A business reporting 18% AUM growth1 can report far less revenue growth, and frequently does.

JPMorgan's own risk factors describe the exposure from the other side — adverse conditions could prompt outflows or cause clients to invest in products that generate lower revenue2.

The firm's defences are real. Wealth management, where the product is advice rather than a fund, is far more defensible on price than asset management. Alternatives and private markets carry fees that have not compressed. And distribution through three million wealth households3 is worth more than any individual product.

But the direction of the industry's fee rate is one-way, and a 40% return on equity attracts exactly the competition that accelerates it.

Watch revenue growth against AUM growth. When the first is persistently slower than the second, the fee rate is doing the talking.

References
  1. ReportedAssets under management reached $5.1 trillion in the June 2026 quarter, up 18% year on year.
    JPMorgan Chase & Co., second-quarter 2026 earnings release (Form 8-K, exhibit 99.1) — net income $21.2bn ($7.70 per share), or $16.9bn ($6.14) excluding significant items; ROE 24%, ROTCE 29% and ROTCE excluding significant items 23%. Reported revenue $57.3bn and managed revenue $58.0bn; expense $27.3bn with a reported overhead ratio of 48%; credit costs $2.5bn with $2.4bn of net charge-offs and a $149M net reserve build. Average loans up 10% year on year and average deposits up 7%. CET1 Standardized 14.1% and Advanced 14.2%, total loss-absorbing capacity $590bn, Standardized RWA $2.1tn, cash and marketable securities $1.5tn; book value per share $133.01 up 9% and tangible book value per share $113.35 up 10%; Basel III CET1 capital $303bn; supplementary leverage ratio 5.5%; net payout over the last twelve months 73%. Segment returns: CCB ROE 34% with client investment assets up 21%, a Card Services net charge-off rate of 3.34%, card sales volume up 10% and active mobile customers up 6%; CIB ROE 22% with investment banking fees up 30% year on year, a #1 ranking for global investment banking fees at 9.3% wallet share year to date, markets revenue up 35% with fixed income up 6% and equity markets up 86%, and average client deposits up 11%; AWM ROE 48% with AUM of $5.1tn, up 18%. Significant items were a $4.6bn net gain related to Visa shares ($1.27 of EPS) and $1.0bn of gains on certain equity investments ($0.29). Jamie Dimon: 'These results were the product of a particularly favorable environment with an elevated level of market activity, as well as rigorous execution, years of consistent investment and thoughtful capital deployment.' — Q2 2026 · publ. 2026-07-14 · source ↗
  2. ReportedThe 10-K warns that adverse conditions could prompt outflows or cause clients to invest in products that generate lower revenue.
    JPMorgan Chase & Co., Form 10-K FY2025 — risk factors and competition (SEC, CIK 19617). 'Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, digital asset and other financial technology companies.' 'New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services offered by financial services firms such as JPMorganChase.' The risk factors further warn that advocacy by non-banking competitors for exemptions from regulatory requirements could significantly disadvantage traditional financial institutions; that if the firm does not keep pace with rapidly changing technological advances, including the adoption of generative AI, it risks losing clients and market share, with competition intensified as the feasibility, capability and scalability of new technologies improves; that adverse macroeconomic or market conditions could prompt outflows from funds or accounts or cause clients to invest in products that generate lower revenue; and that the interconnectivity across credit markets increases the risk that the significant expansion of private credit could worsen losses among non-bank lenders and their borrowers, particularly if stress or defaults spread to broader funding and credit markets. — FY2025 · publ. 2026-02-13 · source ↗
  3. ReportedThe firm opened 10.4 million new credit card accounts and grew wealth management households past three million in 2025.
    JPMorgan Chase & Co., fourth-quarter and full-year 2025 earnings release (Form 8-K, exhibit 99.1) — fourth-quarter net income $13.0bn ($4.63 per share), or $14.7bn ($5.23) excluding a significant item; full-year 2025 net income $57.0bn ($20.02 per share), 2025 ROE 17% and ROTCE 20%. Fourth-quarter reported revenue $45.8bn and managed revenue $46.8bn; net interest income $25.1bn, up 7%; expense $24.0bn; credit costs $4.7bn with $2.5bn of net charge-offs. CET1 Standardized 14.5% and Advanced 14.1%, total loss-absorbing capacity $564bn, Standardized RWA $2.0tn, cash and marketable securities $1.5tn; book value per share $126.99 up 9% and tangible book value per share $107.56 up 11%; Basel III CET1 capital $288bn; supplementary leverage ratio 5.8%; net payout over the last twelve months 82%. Segment returns: CCB 4Q ROE 25% and 2025 ROE 32% with a Card Services net charge-off rate of 3.14%, debit and credit card sales volume up 7% and active mobile customers up 7%; CIB 4Q ROE 19% and 2025 ROE 18%, investment banking fees down 5% year on year with a #1 ranking for global investment banking fees at 8.4% wallet share for the year, markets revenue up 17%; AWM 4Q ROE 44% and 2025 ROE 40%, AUM $4.8tn up 18%. Payments revenue reached a record $5.1bn. In 2025 the firm opened 1.7 million net new checking accounts and 10.4 million new credit card accounts and grew wealth management households to over 3 million. The significant item in 4Q25 was a $2.2bn credit reserve established for the forward purchase commitment of the Apple credit card portfolio, a $0.60 decrease in EPS. — Q4 and FY2025 · publ. 2026-01-13 · source ↗
Sources
Generated September 23, 2026