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Jemstep adds KeyBank's Key Investment Services to roster

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Invesco's robo advisor is on a roll.

The firm's digital advice provider, Jemstep, landed a partnership deal with KeyBank's Key Investment Services.

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

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

The partnership puts Jemstep's platform in the hands of Key Investment Service's 330 advisors. Terms of the deal were not disclosed.

The brokerage firm will offer the Jemstep digital advice platform initially to existing small balance IRA accounts, 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."

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

The field has become increasingly competitive, as even a number of retail robo platforms have pivoted to serving institutions.

Roy said Jemstep was content on a slow but steady growth strategy.

"In the case [of] Key Investment Services, 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."

Invesco's acquisition, he added, has only helped the company due to its resources and brand.

"The firm has a great reputation and is not seen as threat, but rather very much a partner with advisory firms," Roy said. "Our clients tell us, 'We know where 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.

Key considerations, he says, included the ability to insert its own money manager versus being required to use the platform's algorithm, and that Jemstep is not funded by venture capital.

The deal is also an acknowledgement of trends pushing banks to adopt digital advice options, he 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," Hansen said.

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

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

"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."

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