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Are Robo-Advisors Fiduciaries? (PDF)

23 pages. "This paper addresses whether robo-advisors are 'fiduciaries.' The simple answer is 'yes.' As registered investment advisers, robo-advisors are deemed to be 'fiduciaries' that owe a fiduciary duty of loyalty to their customers and can be liable for breach of fiduciary duty.... Merely labeling robo-advisors as 'fiduciaries' does not signify what fiduciary standard of care they are subject to, which should be of most interest to investors and regulators[.]"

FINRA's Report on Robo-Advisors: Fiduciary Implications

"The report implicitly raises the question of whether robo-advisors meet the fiduciary standard of care applicable to broker-dealers and investment advisers. The report suggests that, on a stand-alone basis, robo-advisors do not meet a fiduciary standard when they advise individual investors. The report supports the view that human judgment by a trained financial professional is a necessary element of the fiduciary standard. This paper analyzes the findings and implications of the FINRA report in light of the fiduciary standard of care and poses questions that need to be answered by regulators concerning the fiduciary standard to which robo-advisors -- as well as investment advisers and broker-dealers -- will be held in the future."