• Morrison Shafroth

Robo-Fiduciary? Oxymoron?

The February Investment Advisor Magazine cover story looks at the issue of whether or not Robo-advisors can be fiduciaries.

Author Scott MacKillop lays out the issue in black and white (accompanied by some nice graphics) and asks difficult and revealing questions about Robo-advice -- a phenomenon that has moved rapidly and transformed the advisory industry indelibly.

I like the summation by Jamie Green, editorial director at ALM Media:

  • "MacKillop is far from being a Luddite. His firm smartly uses tech to control the fees it charges all his clients. While he's tough on robos’ legal standing in the story, MacKillop argues that robo technology has been — and will continue to be — “a powerful positive force in our industry. It is transformative and will be a part of every financial advisor's practice in the years to come.”

Coincidentally, Robo-leader Betterment announced recently that its retail platform will offer advisory services from certified financial planners and other licensed financial professionals. Fast Company suggested that "to compete with incumbents like Charles Schwab and Vanguard, Betterment will have to become more like them." They may have to be regulated like them as well

No doubt, this issue begs for a resolution. It will be interesting to see how a Trump Administration chooses to address this fiduciary issue suitably.

To quote MacKillop: "There is much at stake for the robos; there is little agreement on the answer."