Industry leaders outline best practices for digital advice platforms at compliance seminar.
By Stephen P. Wink and Naim Culhaci
Robo-advisers, or digital advice platforms, have rapidly become a standard part of financial services offerings. Virtually every incumbent retail brokerage firm either has established or is planning to establish a digital advice platform, joining the pure FinTech players who pioneered this market. This turn toward robo-advisers is being driven by the potential for cost efficiencies, as well as the desire to connect with younger investors, who often prefer an online interface.
Over the past few years, regulators, lawyers, and compliance professionals have grappled with how to apply established regulatory concepts to the robo-advisory context, in which human involvement can be minimal to nonexistent. At the 2019 SIFMA Compliance & Legal Society Seminar, Latham & Watkins participated in a panel discussion with legal executives from banks and investment firms on this issue.
Among the topics discussed at the panel were recent enforcement actions in this area, as well as the SEC’s and FINRA’s guidance regarding collecting adequate information from investors, providing robust disclosure and properly supervising the establishment and maintenance of the robo algorithms.
Latham prepared a detailed outline of the critical issues surrounding robo-advisers, which is available here.
Submit a comment about this post to the editor.