Abstract

http://ssrn.com/abstract=2658701
 


 



Robo-Advisors: A Closer Look


Melanie L. Fein


Fein Law Offices

June 30, 2015


Abstract:     
Robo-advisors have been touted by the Department of Labor as a source of investment advice that can benefit retirement investors by minimizing costs and avoiding conflicts of interest. On the other hand, they have been labelled as gimmicky and overly simplistic by some critics who have used them. The Securities and Exchange Commission has cautioned that robo-advisors may result in investment recommendations that are based on incorrect assumptions, incomplete information, or circumstances not relevant to an individual investor.

This paper examines whether robo-advisors in fact provide personal investment advice, minimize costs, and are free from conflicts of interest. It also evaluates whether robo-advisors meet a high fiduciary standard of care and act in the client’s best interest. Based on a detailed review of user agreements for three leading robo-advisors, this paper concludes that robo-advisors do not live up to the DOL’s acclaim. They are not designed for retirement accounts subject to ERISA and should be approached with caution by retail and retirement investors looking for personal investment advice.

Number of Pages in PDF File: 33

Keywords: roboadvisor, roboadvisors, robo-advisor, robo-advisors, robo adviser, robo advisers,


Open PDF in Browser Download This Paper

Date posted: September 10, 2015 ; Last revised: November 14, 2015

Suggested Citation

Fein, Melanie L., Robo-Advisors: A Closer Look (June 30, 2015). Available at SSRN: http://ssrn.com/abstract=2658701 or http://dx.doi.org/10.2139/ssrn.2658701

Contact Information

Melanie L. Fein (Contact Author)
Fein Law Offices ( email )
HOME PAGE: http://www.feinlawoffices.com
Feedback to SSRN


Paper statistics
Abstract Views: 6,139
Downloads: 2,353
Download Rank: 3,589

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.204 seconds