Riding on the wave of technological innovation in finance, the robo-advice model has become a possible solution to help people manage their pensions and invest their savings for retirement. This report provides an overview of the types of robot advisors that are now available, and examines the potential benefits, risks and challenges of these platforms.
The main conclusions of the report are:
- Robo-advice platforms have the potential for increasing access of investments to a broader market, and doing so relatively cheaper than through traditional channels.
- Robo-advice platforms have the potential for providing objective, coherent and transparent financial advice.
- However, this higher level of automation may require different approaches to ensure that users have a sufficient level of understanding of the investments they are making.
- Policy makers should ensure that robot advisors are subject to the legislation in force governing the applicability of the requirements of the duty of diligence, prevention of conflicts of interest, transparency of disclosure and access to redress in case of an unfair result for the consumer.
- Regulators and supervisors will need to have processes in place to ensure that the algorithms these platforms use are accurate and solid.
