What do the recent SEC robo guidelines mean for advisors?

New SEC guidance provides effective ways for advisors to comply with disclosure regulations

Kevin Cimring 001Robo-advisors continue to represent a fast-growing trend in the investment advice industry, changing the way firms engage with and service their clients. However, given the automated and online nature of their business models, there are unique considerations for robo-advisors when complying with traditional regulations.

Following collaboration with industry participants, the Securities and Exchange Commission’s (SEC) Division of Investment Management released a Guidance Update1 on February 23, which includes suggestions to help robo-advisors meet disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940 (IM Guidance Update No 2017-2).

The result of this collaborative approach is

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Will technology eventually replace human financial advisors?

While online tools are increasingly being adopted by investors, we believe people will continue to benefit from access to skilled advisors

roy_simonSo-called robo-advisors — services that provide automated investment recommendations — have gained acceptance in recent years for their ability to provide investors with easily accessible, around-the-clock financial services.

Not surprisingly, one of the biggest questions I hear in the industry is whether or not technology will ultimately supplant the human element of investment advice. After all, many people remember how travel agents used to be a critical part of vacation planning, before the internet age made it easy to book airlines and hotels yourself.

I believe digital tools can enhance the advisor-investor relationship, not end it. Instead of viewing financial technology as a replacement for traditional, relationship-based advice, I believe it should be viewed as a complement to the advisor’s existing practice.

Parallels with the tax preparation industry

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