Wharton Pension Research Council Working Papers
 

Document Type

Working Paper

Date of this Version

12-1-2018

Abstract

This chapter examines the regulatory and market structure concerns raised by automated financial advisors, and arrives at two conclusions. First, the principles-based regulatory approach of the 1940 Investment Advisors Act in the U.S. appears adequate and sufficiently flexible to address the new issues raised by automation, at least for now. Second, there is a pressing need to develop new mechanisms for encouraging investment robo-advisors (and financial advisors generally) to provide high quality decumulation services to their customers, because neither of the two prevailing compensation approaches – assets under management and commissions – provides sufficient incentive at present, and consumers are poorly equipped to evaluate the quality of decumulation services on their own.

Comments

This Working Paper is part of a forthcoming publication, entitled The Disruptive Impact of FinTech on Retirement Systems.

Keywords

Investment Advisors Act, decumulation, asset management, regulatory strategy, market structure, roboadvisor

Working Paper Number

WP2018-19

Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. © 2018 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

Share

COinS
 

Date Posted: 18 January 2019