Financial Guard, which offers clients customised financial advice through an online portal using aggregated information, will operate as part of Legg Mason's alternative distribution business in Baltimore.
"We believe this investment in innovative technology and people is a valuable addition to Legg Mason's distribution efforts over the long term," said Terence Johnson, the company’s global head of distribution, in a statement on Thursday.
"Technology innovation is redefining consumer expectations and financial firms need a comprehensive, accessible, secure technology solution to serve their clients in this dynamic environment."
The buyout will also expands Financial Guard’s access to financial institutions, said Legg Mason.
The deal comes as the financial services industry prepares for the US Department of Labor's new fiduciary standard, due to take effect next year. The new rule requires financial advisers to base their retirement investment recommendations on their clients' best interest and applies to pre-tax retirement investing, such as 401(k) plans and Individual Retirement Accounts, commonly called IRAs.
Legg Mason said the acquisition will help financial institutions be “well-positioned” to comply with the new rule.
A recent survey sponsored by the firm estimates that there is approximately $845bn in small IRA accounts of less than $25,000 (£19,301, €22,559) at US wirehouses, independent broker dealers and regional brokerage firms that may be impacted by the new DOL rules.