Assets on fund platforms are expected to grow by about 20% p.a. in the coming years, outpacing expected overall average AuM or ETFs market growth. This can be explained by growing outsourcing needs, new D2C (Direct to Consumer) offerings and assets transfer from DB to DC.
In addition, Juniper Research forecasts that 66% of global AuM are expected to be advisor-assisted in 2022.
Booming platforms & advisor-assisted assets will fuel further asset managers’ business model adaptation from AuM-based fee to AuA (Assets under Advisory) & services fee ; in other words, from pure asset management to 'asset & technology management'.
Invesco is among the competitors who have undertaken this adaptation and aspires to be a global market leader in digital advice with several initiatives in the U.S. as well as in Europe.
Acquisition of the leading advisors’ software to expand in the UK
Last June, Invesco acquired Intelliflo (£335bn in assets under advice /19,500 users), a company that provides full-scale advisory management software integrated with advisors’ tools & funds/products providers. Intelliflo is held by around 30% of UK financial advisors (IFAs, wealth managers, adviser networks & insurance companies such as Legal & General or Nationwide Building Society).
Intelliflo's Intelligent Office 'software as a service' (SaaS) platform is the backbone of the UK wealth sector, assisting financial advisors across the full advice journey including client relationship management, financial planning, client reporting, portfolio valuation and provision of advisor-led automated advice. Intelliflo’s revenues have witnessed an annual growth rate of 19% in the past three years.
With the same idea, Fidelity Investments has integrated its B2B tool (enterprise data collection, modelling & rebalancing, business development analytics) into a RIAs & Broker Dealers’ leading financial planning software (eMoney used by 24% of US advisors, the 2nd most-used in the market).
Although Invesco has stated that Intelliflo will continue to operate as a standalone entity, the fact that Invesco will have access to data for about a third of the adviser market will be a significant advantage over other asset managers.
According to Moody’s, an additional spur to demand for Intelliflo’s services is the European Union’s new GDPR (General Data Protection Regulation). The regulation mandates strict rules to protect client data at firms that host and process the data. Intelliflo offers a toolkit to help firms meet regulatory demands for data protection.
More generally, integration of B2B technology platforms within asset managers’ ecosystem provide the following main benefits:
- access to a new channel to reach a broader investor base with a partnership approach
- cross-selling covering all client needs (product selection, investment advisory, client & distribution services) and the whole digital journey
- promotion of in-house products – particularly passive ones – and the capacity for advisors to charge direct advisory fee between different teams involved
- knowledge sharing between different teams involved, technology leveraging between clients solutions & internal needs
Press reported that Invesco next move into the UK market could be the launch of a D2C robo-advisor platform. The service would be similar to those offered by Nutmeg, Scalable Capital and Moneyfarm.
In the U.S., full set of tools & services through dedicated App for RIAs…
Living Ratings’ 2018 study on asset managers’ brand & digital effectiveness (the full study is available on iWatch) reveals that 25% of them offer an intermediary app and 35% advisors-dedicated tools. Invesco have embedded its tools & services within its dedicated app for RIAs.
Invesco’s mobile app presents fund information in an easy-to-digest format. Users can search for the latest pricing, performance and quartile ranking data for any mutual fund or ETF that Invesco offers along with portfolio manager videos and insights.
Secure client-account access allows registered advisors to view detailed account data, including holdings information, transaction details and statements. Customizable briefcases, which include a watch list section for favorite funds and a spotlight favorites section for most-viewed videos and articles, let advisors gather investor-specific content for client meetings.
Moreover, tools & services features are included such as model portfolios capabilities or advisor consulting services. Invesco Consulting solutions are offered in the US with the aim of helping financial professionals keep & grow their business. Comprehensive services include: conversation starters, business development training (inc. video & toolbox), professional development, web & digital design etc.. The team is made of 14 consultants who manage 25 programs and visit 40,000 RIAs per year.
Both the content and the functionality are updated quarterly to adapt to investors’ changing needs.
Click here to see the 2’ video with the link below to get an overview from Invesco’s B2B app.
… as well as through its integrated market-leading B2B robo-advisor Jemstep
Invesco entered the Robo Advisory business in the U.S. in 2016, by acquiring robo advisor Jemstep. Jemstep was one of the first digital platforms to focus on B2B business. This deal supported the company's advisors with advanced and flexible tools, helping to deliver professional advice to their clients online.
Jemstep Advisor Pro features a paperless sign-up process that integrates with an advisor's existing portfolio accounting systems, CRMs (link with salesforce software) and website to make it easy for new clients to sign up. The platform automatically allocates a client's assets to a model designed by the advisor, combining the technological efficiency of a robo-advisor with an advisor's unique investment strategy. Jemstep’s investment options go beyond simple market-cap-weighted indexes, another attraction for Invesco who is a leading player in Smart Beta.
Jemstep is live with more than 20 clients, among which Advisor Group for whom Jemstep agreed last year to provide a digital onboarding, advice and data aggregation platform for its U.S. financial advisors affiliated, which comprises four separate advisory firms serving more than 5,000 advisors with approximately $160 billion in client assets.
In the Canada, Invesco’s advisorDUO system gives financial advisors the ability to connect with their clients anywhere / anytime to provide a comprehensive range of digital services, from onboarding new clients to recommending investment portfolios.
Jemstep seems to be integrated with Invesco’s day to day business as Invesco said it has deployed some 300 sales and service people to work with advisors and home offices to implement the technology. Moreover Jemstep’s Chief Operating Officer is also the global Head of Digital Strategy for Invesco.
Invesco has a comprehensive set of services to answer RIAs' attempts
Invesco’s move into the robo-advisory space and digital distribution globally is tied with one of its key development strategy which is the ETF business (Invesco is the world fourth-largest ETF provider): acquisition of PowerShares in 2016, Source in 2017 and the recent takeover of Guggenheim Investments’ ETF business. With ETFs being components within solutions (model portfolios, advisory, etc.) and as solutions become more embedded in digital strategies, Invesco intend to grow its business with the related synergies.
It is also worth noting that Invesco’s Global Head of ETFs is a member of the Board of Directors of AlphaPoint– a blockchain technology company specialized on assets digitization.
ETFs-based solutions, asset allocation advice and financial planning capabilities - all provided by Invesco with its several digital platforms - are among the most appealing features of advisor-assisted digital wealth managers as shown in the table below [1]
Invesco’s Intelliflo & Jemstep acquisitions give the asset manager turnkey software suite that will allow it to ‘infiltrate’ financial advisors who are increasingly more comfortable interacting with digital technologies.
Author: Eddy Arnaud - December 2018
[1] Source: Cerulli 3Q 2017, US market
