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JPMorgan Chase launches automated investment portfolios

JPMorgan Chase is finally on the robo advisory scene.

The largest U.S. bank by assets rolled out a new portfolio platform, called You Invest Portfolios, which uses a client’s risk tolerance assessment to allocate assets into proprietary index ETFs. The product is available on the website and mobile app, according to the firm.

The new portfolio builder is an extension of the You Invest brand which launched last year as a digital brokerage product and offered investors 100 free stock and ETF trades for their first year. You Invest attracted new and younger customers for JPMorgan, as 90% of its users were first time customers and 56% were under the age of 40.

The You Invest Portfolio has an account of $2,500 with a fee of 35 basis points and is designed for customers who want additional help investing.

Pedestrians pass in front of the JPMorgan Chase & Co. headquarters in New York, U.S., on Friday, July 6, 2012. JPMorgan Chase & Co. is scheduled to release earnings data on July 13. Photographer: Scott Eells/Bloomberg
Pedestrians pass in front of the JPMorgan Chase & Co. headquarters in New York, U.S., on Friday, July 6, 2012. JPMorgan Chase & Co. is scheduled to release earnings data on July 13. Photographer: Scott Eells/Bloomberg

Competitors are also trying to attract new investors by keeping their thresholds fairly low. Wells Fargo’s minimum starts at $10,000 while Bancorp America recently cut theirs by half to $5,000.

Robo-advised portfolios often use ETFs, but the indexes are usually from fund families from across the industry — like Vanguard, BlackRock or handcrafted, proprietary product. By offering its own ETFs, JPMorgan says it rebates fees and lowers costs for clients.

Cost is an important differentiation point for competing banks, says Aite Group research director Alois Pirker. “Robos offer diversification and low-cost,” he says.

The new digital portfolios are a significant opportunity for JPMorgan, as robo advisors are the right tool kit to grow organically and find next-generation clients, Pirker says. It’s also an opportunity to get banking clients who don’t invest with the bank.

“It’s keen to see what traction they get from the non-investing clients that they have,” Pirker says.

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