The rise of robo-advisers

With automated investment services surging in popularity, federal regulators have provided new guidance for investors on use of the robo-advisers.

The “robos” are brokerage firms that use computergenerated formulas to manage investments for clients online, often with little human contact and at a fraction of conventional advisers’ fees.

The Securities and Exchange Commission recently issued an investor bulletin on robo-advisers. It discusses issues that investors should consider: How much human interaction is important to you? What information do robo-advisers use? What are the fees and other charges?

Robo-advisers occupy a small corner of the investment management market. But their footprint is growing. Some major firms, like Schwab and Vanguard, have jumped into the game.

People may not be aware that as investment advisers, “robos” must register with the SEC or state securities regulators and meet obligations to act in investors’ best interests. The SEC’s Investment Adviser Public Disclosure database, on www.Investor.gov, provides background information including the license status and disciplinary history of any individual or firm that recommends investments, including robo-advisers.

The new investor bulletin is available at the