Robo-advisors are internet-based advisory services that use algorithms to create investment recommendations with no human input, and they are growing in popularity. They deliver financial advice at a fraction of the cost of traditional financial advisors. However, the nature of the interaction between client and machine raises many legal questions and concerns. It is unclear how regulators should approach the phenomenon. Regulators in major jurisdictions have taken different approaches. This article argues that robo-advisory is essentially different from traditional financial advice. Nevertheless, it demonstrates that current regulation, in particular the European Union framework for financial intermediaries, is able to address most of the resulting issues. The core conclusion is that, in applying the existing rules to robo-advisors, the rules should not be interpreted to create a level playing field for all market participants.     «

Robo-advisors are internet-based advisory services that use algorithms to create investment recommendations with no human input, and they are growing in popularity. They deliver financial advice at a fraction of the cost of traditional financial advisors. However, the nature of the interaction between client and machine raises many legal questions and concerns. It is unclear how regulators should approach the phenomenon. Regulators in major jurisdictions have taken different approaches. This...     »