The SEC recently issued regulatory guidance for robo-advisors. This guidance focuses on what robo-advisors must do to meet their disclosure obligations.
Among other things, the SEC has recommended robust disclosures in the following areas:
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The use of algorithms, overrides, third parties, fees and client information.
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The limits on use of the robo-advisor model to ensure adequate disclosures.
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Adequate and clear investment questionnaires to ensure suitability of investments.
Robo-advisors are a growing trend. Thus, it is only logical that the SEC would provide such guidance. Now that the SEC has spoken, it is on you to ensure that you take the message to heart; or learn the hard way.
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