December 20, 2017 / 4:45 PM / a year ago

JPMorgan Chase powers up robo-adviser for fintech race

    By David Henry and Elizabeth Dilts
    NEW YORK, Dec 20 (Reuters) - JPMorgan Chase & Co is
powering up a lower-cost computerized investment management tool
this week and plans to offer the robo-adviser to some clients
next March and on a wide scale in the middle of the year.
    The company will file required disclosures on Wednesday with
the U.S. Securities and Exchange Commission, bank officials told
Reuters, so they could start testing the service this week with
fewer than 100 employee accounts.
    The goal is to offer "guidance and advice for a broad range
of clients, whether you have a few thousand dollars, or more,"
said Kelli Keough, head of digital wealth management. 
    The service, piloted as JPMorgan Digital Investing, is the
latest in a raft of online investing tools called robo-advisers
that firms offer as a low-cost way to get basic advice and
automated portfolio management.
 Product name        Account        Fee on assets
                     minimum             under management *
 Betterment          No minimum     25 basis points
 JPMorgan Chase      $5,000 **      To be determined
 Merrill Edge        $5,000         45 basis points
 Guided Investing                   
 Morgan Stanley      $5,000         35 basis points
 Access Investing                   
 Personal Capital    $100,000       89 basis points***
 Schwab Intelligent  $5,000         No advisory fees beyond operating
 Portfolios                         expenses on ETFs in portfolio
 Vanguard Personal   $50,000        30 basis points
 Advisor Services                   
 Wealthfront         $500           Free for first $10k, 25 basis points
                                    for more
 Wells Fargo         $10,000        50 basis points
 Intuitive Investor                 
 * For basic                                                               
 ** During testing                                                         
 *** Up to $1 mln                                                          
 in assets                          
 SOURCES: The                                                              
    The services ask such questions as customer age, risk
appetite and objectives, then suggest investments like
diversified exchange-traded funds, which often are selected by
an investment committee. Computers rebalance portfolios
according to preset rules.
    The robo-advisers are viewed as a low-cost way to attract
individuals who do not yet have enough money to make individual
personal management worthwhile. 
    Consulting firms estimate the services could be managing
more than $10 trillion within several years. Financial companies
including Morgan Stanley, Wells Fargo and Bank of
America's Merrill Lynch, have followed fintech firms,
such as Betterment, with the offerings.   
    Fees for basic services range from 25 to 50 basis points
annually, or $2.50 to $5.00 per $1,000 invested, significantly
less than the roughly 100-basis-point fees financial advisers
    JPMorgan plans to set its fees for the public by March,
Keough said. It will also lower the $5,000 minimum investment
being used during testing with employees. "We are exploring and
testing a variety of different pricing mechanisms," Keough said.
     Chief Executive Officer Jamie Dimon said last year the bank
could offer the service free or as part of a package of
    JPMorgan is the biggest U.S. bank by assets, with upwards of
50 million customers holding consumer banking and credit card
    The bank developed the service in-house with InvestCloud, a
financial software firm that it hired and invested in last year
to improve its online, mobile banking and investment offerings.
    The investment in the automated service is part of a $300
million commitment by Dimon for better technology for asset
management products, Keough said.

 (Reporting by David Henry and Elizabeth Dilts in New York;
Editing by Jeffrey Benkoe)
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