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SEC Announces Increased Scrutiny of Robo-Advisors

January 13, 2017 | Bill Harris

The Securities and Exchange Commission (SEC) announced yesterday that for the first time it is adding “electronic investment advice” – i.e. advice offered through robo-advisors – to its annual list of examination priorities.

At Personal Capital, we have always strongly positioned ourselves outside of the robo-advisor realm. Personally, I have run around the country sharing what we do as a digital wealth manager (not a robo-advisor), combining the best of technology with human financial advisors. And actually, we participated in an examination by the SEC just last year.

Some of the reasons why we are not a robo-advisor include:

  • We offer the most comprehensive personal finance and financial planning software available to both its clients and to any individual or family for free.
  • We provide the same types of investment management services that simplistic algorithmically based ETF-only robo-advisors offer – plus a level of sophistication and personalization that greatly exceeds them.
  • We serve clients who are in a very different demographic, socioeconomic and psychographic group, with very different needs than the standard robo-advisor client. For example, the average assets of Personal Capital’s clients is over $300,000, versus the average assets of the leading robo-advisors is well under $50,000.
  • In addition to all of our software-based tools and capabilities, Personal Capital provides live, dedicated, licensed and independent financial advisors who work directly with each client.

We are also a fiduciary of our clients’ money, which means we not only desire, but are required, to offer advice in the best interest of our clients. The Department of Labor’s fiduciary rule requiring any financial advisor or broker to operate in their client’s’ best interest when advising on 401k, 403b and individual retirement accounts is slated for implementation come April, and we’re keeping a close eye on the roll out of the rule. While there has been talk of President-elect Donald Trump and the incoming administration repealing these regulations, we support the rule and hope that it is implemented as planned. Repealing the fiduciary rule would be an immense disservice to millions of investors working toward a financially secure retirement.

Our mission statement is simple: ‘Better financial lives through technology and people.” I think that says it all.

Read the full press release here.

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