KeyBank turns to Invesco's robo-adviser for help

Invesco's robo-adviser is on a roll.

Jemstep landed a partnership with KeyBank's Key Investment Services.

The agreement comes just a month after Jemstep inked a deal to provide its platform to the independent broker-dealer Advisor Group, which has more than 5,000 advisers.

"Key Investment Services is the first of hopefully many similarly large broker-dealers and insurance companies we're going to be working with," Jemstep Chief Executive Simon Roy said.

The partnership puts Jemstep's platform in the hands of Key Investment Services' 330 advisers. Financial terms of the deal were not disclosed.

The brokerage firm will offer the Jemstep digital advice platform initially to existing small-balance IRAs, said Paul Hansen, chief operating officer for Key Investment Services.

"Initial phases will be relatively small and increase in size in the later phases," he said. "Ultimately, the platform could be offered to as many 80,000 existing clients."

'Increasingly competitive'

Invesco joined the ranks of asset managers with digital advice offerings last January when it acquired Jemstep. In the months after that deal, competitors announced a series of similar deals with robo startups.

Jemstep CEO Simon Roy.

Though banks had been skeptical of robo-advisers early on, they are increasingly starting to embrace the idea of offering these automated services to their customers.

Key Investment Services is already at the stage where it is about to roll out the Jemstep platform. "We have waited until we were in production to make this announcement," Roy said. "This is not an announcement about a possible deal. This is an integration ready for phase implementation."

Roy said Jemstep is content with a strategy of slow but steady growth.

The Invesco acquisition is helping, because the new parent company brings with it the advantages of resources and brand recognition.

"The firm has a great reputation and is not seen as a threat, but rather very much a partner with advisory firms," Roy said. "Our clients tell us, 'We know you're going to be here tomorrow.' There's no questions about how much capital we've raised, or if we are going to end up with a competitor."

Hansen agreed, noting that the brokerage looked at several providers before settling on Jemstep.

One major consideration, he said, was the ability to insert its own money manager versus being required to use the platform's algorithm. Key Investment Services also liked that Jemstep is not funded by venture capital.

The deal is an acknowledgment of trends pushing banks to adopt digital advice options, Hansen said.

"Clearly, financial services companies are focusing more and more on the digital channel and we felt that digital advice platforms such as Jemstep are mature enough to begin implementing as part of our overall product platform," he said.

'Strategic focus'

In addition to these deals, Invesco has imported Jemstep's technology to its independent advisers in Canada.

Roy, however, dismissed as a "misconception" the notion that Invesco acquired his platform to expand its product distribution.

"If they were purely focused on distribution, we would not be reporting to the chief administration officer, we would be reporting to sales, and we would not be a separate entity," Roy said.

"A strategic focus and belief drove the investment into Jemstep, that there is a rising tide of digital adoption by clients and an increasing need for digital in the wealth management business," he added. "For Invesco to continue adding value to clients and advisory firms, it is an important component and Jemstep is their vehicle to do that."

This article originally appeared in Financial Planning.
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