With its $5.7 billion deal to purchase Oppenheimer Funds from MassMutual, Invesco will become the sixth-largest asset manager in the U.S., according to ETF.com. Invesco says that reaping $475 million in savings over the next two years is a key goal, implying that synergies resulting from scale were a focus of the deal. And, of course, we can’t forget the foreign equity funds that Oppenheimer brings to the party.  Impressive as it is though, I don’t see this deal really altering the prevailing industry dynamics or competitive landscape.


But is there such a thing as an industry-changing deal? What could this industry-shaking deal look like? Is it even a realistic scenario? Well, based on the many industry pressures, the creation of a mega-sized asset manager with a competitive product lineup, an automated advice capability, and access to ultra-high-net-worth clients through RIAs would be a lucrative investment worth considering. If Invesco had acquired a different firm to create this juggernaut, it could have had a huge impact on asset managers and broker dealers. Let’s consider a different, fictitious scenario for Invesco below.


Private Client Division (PCD) is Invesco’s fictional acquisition target’s wealth management business. PCD generated the lion’s share of the target’s revenue and income with $86.9 billion in assets under administration and 1,107 financial advisors across 92 locations. The kicker is that these financial advisors serve family offices and ultra-high-net-worth clients, endowments and foundations, non-profits, 401(k) plans, pensions and senior executives. In addition, PCD boasts a comprehensive offering of capital markets and other macroeconomic research, automated regulatory supervision, insurance, asset management and portfolio management services. In other words, PCD has a foothold in the segment of the advisory industry that controls the lion’s share of assets.


Revenues and Income from PCD (in thousands)





Percentage Change











Income as a percentage of revenue





For its part in this fictitious deal, Invesco clearly has the chops to serve the higher end of the wealth management market that’s increasing its use of ETFs. The 2016 acquisition of Jemstep (now branded as Invesco Jemstep) could turbocharge this whole system. Jemstep is a white-labeled and open architecture digital advice platform for advisors, meaning that the platform allows advisors to build their own portfolios or use portfolios constructed by Invesco. Since the acquisition, Invesco Jemstep has built a foothold in the bank channel by inking a partnership with Key Bank. It also partnered with Shareholder Service Group, which has more than 1,500 RIAs using their services (integrated with Pershing’s NetX360). Invesco also depends on BNY Mellon’s ETF custody services and separately inked a partnership to integrate Jemstep with NetX360. So in my mind, depending on the extent to which the Salesforce Financial Services Cloud—which has selected Jemstep as its digital financial advice offering—is successful in growing adoption, Invesco could be sitting on a proverbial gold mine.


Formidable Capabilities of this Fictitious Combined Entity




1,000-plus financial advisors  

Jemstep digital financial advice platform

Ultra-high-net-worth clients and institutional clients

ETFs across active/passive products and asset categories

Assets, revenues and profits

Pershing NetX360 partnership

Wealth management business enablers (such as Opco Central, Advisor Works, Reged, Prosurv, practice management offerings, training and education, etc.)

Other partnerships like Salesforce financial services cloud, Keybank and SSG


As the table above illustrates, when PCD and Invesco ingredients combine, one can begin to see the makings of an industry-shaping juggernaut. And so it begs the big question: What could a transaction of this nature mean for asset managers and broker dealers?

  1. Asset managers: The largest asset managers, who now have the scale to compete on both price and offerings, are building direct and stickier connections to both financial advisors and investors. Added to the mix of large firms with similar capabilities (Vanguard with Personal Advisory Services, Fidelity with eMoney and Fidelity Go, Blackrock with Aladdin and Future Advisor), a deal like I described above could put further stress on P&Ls of asset managers with less scale, a limited number of successful products and outdated technological capabilities.
  2. Broker dealers: Firms like Schwab (Intelligent Portfolios), TD Ameritrade (Essential Portfolios), Envestnet (Envestnet One) and Betterment may now be on notice that asset managers may be competing for a slice of their pie. Relatedly, and possibly to a greater degree, I also believe that the wires and larger independents may see an increased risk to their wealth management business model going forward. It’s worth asking what about their current business model should change in order to maintain relevance and win.

Perhaps there is more to the Invesco-Oppenheimer deal than meets the eye. Even if there is not, could there be another deal (like the fictional one above) that upends the status quo? Yes, for sure. I wonder whether asset and wealth managers should act now to stake their position, or wait for change to be forced upon them.

P.S.: The fictitious target company, PCD, is the wealth management division of Oppenheimer and Co. (not to be confused with Oppenheimer Funds).