Credit: U.S. Department of Labor

This news could have major effects for the wealth management industry

Keeping FINRA, the SEC and the Department of Labor (DOL) happy is a challenge that all financial advisors, including RIAs, wirehoue advisors, and, most recently, robo-advisors are currently facing. Ultimately, these self-regulating bodies protect the interests of investors like you and me.

From Robert Powell @ Marketwatch:

“[Joel Bruckenstein, publisher of T3 Technology Hub]…, referring to a recent FINRA report on digital investment advice, suggested robo advisers meet the fiduciary standards established under the Labor Department’s conflict of interest rule more so than many human advisers.”

Given the automatic, rules-based nature and technology basis of some of the better robo platforms, it could be said that in certain cases, Robos could best their human counterparts, especially “advisors” who are not actually fiduciaries, like commission-based brokers, insurance salespeople.

“Robos would do it more efficiently than probably 40% to 50% — and that’s being very conservative — of the people who call themselves advisers today who are not fiduciaries,” he said. “So, it all depends on who you are looking at. And where the bar ends up being, because it seems to be a moving bar depending on who’s in office and who is trying to revise the rule.”

Whether you’re using an advisor, robo, or something in between, it’s important to do your diligence and check FINRA’s BrokerCheck and the SEC’s Investment Adviser Public Disclosure website before investing.

Here’s a short list of the SEC-registered Robos we recommend:

  1. Personal Capital – best for do-it-yourself free financial planning advice, this is our favorite free planning tool.
  2. FutureAdvisor – powered by the largest asset manager in the world, BlackRock, FutureAdvisor delivers high-powered analysis to your portfolios.
  3. Betterment – automated investing service that aims to provide optimized investment returns for individual, IRA, 401k, and rollover accounts.
  4. LendingRobot – automated investment tool that allows you to take part in peer to peer (p2p) lending. It can help you start investing automatically with ease.

We believe if you’re going to use an advisor, use a fee-based, independent fiduciary:

Reposted via Robert Powell (@RJPIIIat MarketWatch

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