After Atlanta-based investment manager Invesco purchased Los Altos, Calif.-based digital advice platform Jemstep in January for an undisclosed sum, advisors may have worried that the RIA-friendly technology would lose its independent, open architecture.
Simon Roy, president of the renamed tech subsidiary Invesco Jemstep, attempted to allay those fears at the recent TD Ameritrade National LINC conference.
“Jemstep is being managed as an independent subsidiary, the management team is staying in place, and the platform is going to continue to be an open investment platform,” Roy said.
In the past, Jemstep’s leadership took pains to partner with firms such as TD Ameritrade, who focused mainly on the RIA side of the system. Roy said that Jemstep’s commitment to RIAs will not change.
“I think the perspective that Invesco is taking is that they need to stay relevant so that Jemstep can continue to serve advisors,” Roy said. “They recognize that we need to maintain the integrity of Jemstep.”
In previous comments, Invesco executives have maintained that Jemstep will remain open to a multitude of asset managers. Jeaneen Terrio, head of U.S. media relations at Invesco, reiterated that point, noting that the company isn’t simply seeking to add distribution with the purchase.
“There’s a discussion around technology as a bolt-on for firms, but we don’t see it that way,” Terrio said. “We see this as being another diversified channel for the people who work with our solutions, our practice management value adds in particular. That’s what we feel like advisors want going forward, not just another asset manager.”
However, Invesco funds may be included in Invesco Jemstep model portfolios that consumers can choose on the platform in lieu of a fully customized allocation.
Partnering with Invesco is as much about Jemstep’s continued growth in a rapidly changing industry as it is augmenting Invesco’s digital offering, Roy said.
“Things change, you need access to experts in various domains and to have visibility as to where things are going, and you need to invest to ensure that you’re serving your client firms,” Roy said. “Smaller firms do not have the resources to do that on an ongoing basis at the same time as they’re trying to add value on top of their platform. The reason we’re sitting here with Invesco is because it’s going to take a lot of capital to keep up with the regulatory environment to serve firms.”
As Jemstep’s partner firms became larger and more numerous, the company was faced with questions about its long-term plans and viability, Roy said.
“Significant firms were coming to us and saying ‘We want to use your platform as an underpinning for our business,’” Roy said. “For these firms, their decision to embed technology is as much about the longevity, culture and commitment to them as it is about the utility and quality of the technology, and that’s one of the reasons we ended up embracing Invesco as a partner.”
As part of the arrangement, Invesco’s sales, service and consulting teams will help firms implement Jemstep’s technology. This year, Invesco Jemstep will deploy 300 members of Invesco’s sales and service team to work with firms in the U.S. on utilizing the platform. Invesco Jemstep will also have the advantage of Invesco’s branding, Roy said.
“We’ve been very fortunate to have the level of market adoption, good reviews and press coverage we’ve had, and we’ve rested on that pretty heavily,” Roy said. “With Invesco, we can take what’s been a quite scrappy but successful approach and professionalize it with the benefit of the brand and its resources.”
Invesco, in turn, will use Jemstep technology to help advisors offer clients more diverse investment strategies and will be able to harness Jemstep’s email marketing capabilities.
Rather than using algorithms to automate the investment process, like a robo-advisor, Jemstep Invesco allows firms to deliver advice online to clients via a platform that integrates into most existing digital wealth management systems. Consumers are able to select from asset allocations customized by advisors and registered reps.
Particularly useful to advisors is Jemstep’s client portal, which allows prospects to onboard themselves, then integrates with firms’ existing client-relationship management and portfolio systems.
Roy said the platform, combined with Invesco’s resources, will help advisors scale their businesses across the board. The new entity will blend the human side of practice development and consulting with the digital solution.
“Essentially, we’re taking our technology and wrapping it in services so we can better work in partnership with advisory firms,” Roy said. “By working closely with Invesco’s consulting and practice management groups, we’re going to develop comprehensive solutions for firms to help them evolve their practices and the way they work with their clients.”
To bring more Invesco customers onto the platform, Invesco Jemstep will likely expand to add new custodians in the future. Currently, TD Ameritrade serves as custodian for Jemstep users’ accounts.
Invesco is not the first investment manager to purchase a digital platform. For example, BlackRock acquired FutureAdvisor; Fidelity acquired eMoney Advisor and Northwestern Mutual bought Learnvest -- all in 2015. But this pairing is unusual in that Jemstep will retain its open architecture to allow advisors to explore funds outside of the Invesco universe. Unlike BlackRock, Fidelity and Northwestern, Invesco is focusing on serving advisors, instead of going direct to consumer.
Invesco owns the Invesco PowerShares series of ETFs, which have more than $100 billion in assets, and it currently manages $800 billion in client assets across all of its subsidiaries.