Who's Afraid of Robo-Advisers?
Regulators should fix automated investing's flaws without putting a valuable new industry in a corner.
This article is for subscribers only.
The Massachusetts Securities Division recently fired a shot heard around the robo-adviser world when it declared that the online financial advisers may not be up to snuff as fiduciaries for investors. If that's the case, it means they may not qualify as investment advisers in Massachusetts.
Regulators must of course hold all financial advisers to a high standard, but robo-advisers – the most investor friendly financial innovation since the index fund – are on the frontlines in the fight for better outcomes for investors. It's worth considering whether it would be better to improve robo-advisers' shortcomings rather than discouraging their proliferation.