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JPMorgan to Buy Maker of Tax-Efficient Portfolio Tools

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JPMorgan Chase & Co.(Photo: AP)

J.P. Morgan Asset Management entered into a definitive agreement to acquire fintech firm 55ip, which makes tools that let  financial advisors deliver tax-smart investment strategies to clients.

The news comes less than two months after the companies said they had teamed up to give advisors the ability to easily and efficiently transition clients into JPMorgan model portfolios using 55ip’s automated tax technology.

It also was announced just nine days after asset manager BlackRock said it was buying  personalized indexer and separately managed accounts provider Aperio Group for $1.05 billion. This deal closely followed Morgan Stanley’s announcement that it would spend $7 billion to buy Eaton Vance, including Parametic — which offers SMAs and direct indexing.

About six weeks ago, industry rumors circulated that JPMorgan or possibly Lazard were considering Waddell & Reed as an acquisition target. Waddell & Reed said Wednesday that it was being bought for $1.7 billion by Macquarie Group, which plans to sell the wealth unit to LPL Financial.

“Advisors are increasingly seeking intelligent, automated tools to provide simplicity, scale and efficiency, and by acquiring 55ip we are accelerating our significant investments in advanced advisor technology,” according to George Gatch, J.P. Morgan Asset Management CEO.

55ip’s ActiveTax Technology includes tax-smart transitions, management (including systematic tax-loss harvesting) and withdrawals, and it provides  ongoing tax-smart trading and tax benefit reporting.

The planned acquisition “signifies broad collaboration between fintech and asset managers, aimed toward improving capabilities and outcomes for advisors and their clients,” he said in a statement.

55ip’s “unique application of automated tax management to the model portfolio universe has tremendous potential in today’s market environment,” according to Jed Laskowitz, global head of Asset Management Solutions at J.P. Morgan Asset Management.

“Automating sophisticated strategies while also allowing for customization for tax and individual preferences is a differentiator and will be a key driver of success,” Laskowitz predicted.

Being purchased by J.P. Morgan “will provide greater resources for our current clients and enterprise partners, accelerate our innovation and broaden access to our solutions,” according to Paul Gamble, 55ip CEO.

55ip “will continue to operate as a separate entity, under its own brand, with the full support of J.P. Morgan and remains committed to serving its existing clients and enterprise partners,” the companies said Wednesday in a joint announcement. Terms of the deal were not disclosed.