SEC Staff Issues Guidance Update and Investor Bulletin on “Robo-Advisers”

March 14, 2017

The staff of the Division of Investment Management (Staff) of the U.S. Securities and Exchange Commission (SEC) published a Guidance Update (Guidance) on February 23, 2017, on the subject of automated investment advisers (often referred to as “robo-advisers”) and their obligations under the Investment Advisers Act of 1940 (Advisers Act). The Guidance provides the Staff’s most recent views on the growing number of SEC-registered investment advisers (RIAs) that utilize automated and digital processes to provide investment advisory services. The SEC Guidance provides suggested practices for robo-advisers to consider in: (i) meeting their disclosure obligations; (ii) assessing the suitability of their investment advice; and (iii) adopting and implementing effective compliance programs. Concurrently with the issuance of the Guidance, the SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin to help educate investors regarding robo-adviser services. The Guidance follows in the wake of guidance and reports published by other legal and regulatory bodies on this topic.

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