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Invesco Buys Jemstep

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Invesco (IVZ) said Tuesday that it bought Jemstep, a maker of advisor-focused digital solutions. The transaction closed today, and neither party disclosed the terms of the deal.

The technology platform is not what’s commonly considered to be a robo-advisor, since it does not rely on algorithms to automate a do-it-yourself investment process. Instead, it aims to support financial advisors who want to deliver advice online to clients, according to Invesco, who adds that the Jemstep platform is “easily integrated” into existing wealth management technology systems.

“We believe investors are best served by partnering with a financial advisor to reach their unique investment goals,” said Invesco CEO & President Martin L. Flanagan, in a statement.

The news comes two months after Silver Lane Advisors predicted that Invesco and State Street would move into the robo space in order to keep up with rivals like Vanguard, which developed its own robo platform, and BlackRock, which acquired FutureAdvisor.

Invesco’s capital management unit owns the Invesco PowerShares lineup of ETFs, which have some $100 billion in assets under management.

“The robo-advisor wave clearly can take several paths forward, with one potential being that the offering narrows in scope to a front engine for low-cost ETF funds,” Silver Lane Partners said in a report published in November. “As such, State Street and Invesco have yet to make a major move in the space but would appear to be logical players given their major presence in ETFs.”

Different Take

The partners emphasize the platform is different from robo-advising.

“The Invesco Jemstep combination is unique in that it will unite world-class investment management capabilities, Silicon Valley technology and expert human advice to deliver a comprehensive digital solution,” said Peter Intraligi, Invesco’s head of distribution for North America, in a statement. “We will deploy our industry-leading home office and field sales support in the U.S. to ensure that advisors realize the value of incorporating a digital solution into their practices.”

Some 300 members of Invesco’s sales and service team plans to work with home offices and advisors in the United States on platform use.

“As we continually look to enhance our partnerships with advisors, we recognize that digital solutions can expand their options for meeting client needs,” Flanagan explained. “Jemstep’s proven platform enhances our ability to help advisors grow their business and by seeking to deliver superior client experiences in a rapidly evolving market environment.”

For instance, the platform lets investors access professional advice online through customized asset allocations that have been selected and customized by registered reps. Invesco adds that this platform gives clients “a variety of professionally selected investment options across mutual funds and ETFs,” not just those focused on market-cap-weighted indexing. “Similar to Invesco’s objective of helping advisors provide the best solutions for clients, Jemstep was founded on the principle of helping advisors differentiate their offerings by maintaining competitiveness,” said Jemstep President Simon Roy, in a press release.

In addition, the Jemstep platform will give home offices “new and differentiated insights to help track advisor progress, view client data in aggregate, enhance portfolio management offerings and services, manage risk, as well as broaden their client reach to address intergenerational needs,” according to Invesco.

Observers say this acquisition is further evidence that big financial firms are looking closely at fintech startups.

“Together with BBVA buying Simple, BlackRock buying FutureAdvisor, and Fidelity buying eMoney, this is evidence of how expensive and challenging tech and product innovation is inside a large financial institution. I think large financial institutions are learning to look at startups as outsourced innovation, and rightfully so,” said Polly Portfolio CEO Jasen Yang, in a statement.

“All financial institutions need modern digital customer service. Jemstep’s original business model was to provide an alternative to the build vs buy debate: rent,” Yang explained. “But I think this is a signal that financial services providers still have a hard time renting a key piece of the customer relationship.”

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