Rethinking Automated Investment Adviser Disclosure

Disclosure could be aptly described as a regulatory darling and is often relied upon to regulate the financial services industry. Though arising in different regulatory frameworks, the critiques of disclosure in situations where the end user is a consumer investor provide insight for evaluating robo-adviser disclosure. In rethinking disclosure vis-a-vis robo-advisers, these areas should be studied to determine the methods of meaningful disclosure, or where disclosure has fallen short, in circumstances where there are information asymmetries between those required to give disclosure and those who act after receiving it. Regulators from the US Securities and Exchange Commission and the Financial Industry Regulatory Authority jointly highlighted the need for adequate disclosure as the first main point of their initial guidance to investors about automated investment advice. The chapter concludes with a recommendation: robo-advisers and investor collaboration via an active and iterative disclosure regime that encourages investor comprehension, understanding, and learning.