SEC Provides Guidance for Working with Robo-Advisers

Robo-advisers are registered financial advisers who use mathematical rules or computer algorithms to provide financial advice or portfolio management online. This recent trend, which requires very little human interaction, has the potential to impact the competitive landscape in the market by offering more affordable access to investment advisory services to retail investors. Although robo-advisers were originally geared toward millennials, investors from other age groups and classes are seeing the advantages of using these automated digital investment advisory programs. Clients simply enter their personal information and other data into an interactive, digital platform such as a website or mobile application, which the robo-adviser then uses to generate a portfolio for the client.Because the level of human interaction, as well as the method for collecting information from clients varies from one robo-adviser to the next, investors should assess what they want and need from an investment adviser. To help investors determine what to look for in a robo-adviser, the SEC published an Investor Bulletin last month. The publication addresses such considerations as:

  • Level of human interaction
  • Information required for creating recommendations
  • Approach to investing
  • Fees and Costs
  • Licensing and registration

In addition to deciding whether or not a robo-adviser is a good fit, investors should research the background, including registration or license status and disciplinary history, of the adviser before investing. Because robo-advisers are typically registered as investment advisers with either the SEC or one or more state securities authorities, investors can research them using the SEC’s Investment Adviser Public Disclosure (IAPD)database, which is available on learn more about robo-advisers versus traditional investment advisors, contact Jacko Law Group, PC at (619) 298-2880, or email  Thank you.

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