This note examines the complex state of financial innovation and preexisting investor protection regimes, mainly the Investment Advisers Act of 1940, which do not properly address the question of whether a robo-advisor platform serving as registered investment advisers satisfies the fiduciary standard elements laid out in the Act. This article examines the current regulation from the Department of Labor, the Financial Industry Regulatory Authority, and the Securities and Exchange Commission and addresses the inadequacies in each regulatory entity’s policy prescription. This article contends that robo-advisors can not act as a fiduciary for several reasons – primarily because these platforms do not provide the type of individualized portfolio analysis that traditional fiduciary agents provide.
Bret E. Strzelczyk,
Rise of the Machines: The Legal Implications for Investor Protection with the Rise of Robo-Advisors,
DePaul Bus. & Com. L.J.
Available at: http://via.library.depaul.edu/bclj/vol16/iss1/3