In a November 10, 2021 article for Financial Advisor magazine, Tracey Longo reported that the Securities Exchange Commission (SEC) slammed almost all “Robo-Advisors” with deficiency letters.   

Robo-Advisors are low-cost digital investment advisors offering automated advice with little or no human interaction.   

Deficiencies noted in the SEC risk alert include those centering on robo-advisors’ fiduciary duty to provide advice in each client’s best interest, compliance programs, and inadequate disclosures about the human element of their services.   

Marketing and performance advertising was a focus of the SEC warning to investors. Examiners gave particular attention to whether or not robo-advisors were upholding their fiduciary duty to provide clear and adequate disclosure regarding the performance history and nature of the advisors’ services and act in their clients’ best interests. Exams uncovered the fact that more than 50% of robo-advisors had advertisement-related deficiencies, including misleading statements and “vague and unsubstantiated claims.”   

Moreover, many robo-advisors failed to periodically evaluate or update whether or not accounts are still being managed based on clients’ needs. Robos also failed to inquire about any changes in investors’ financial situations or investment objectives, the SEC found.   

“When robo-advisors fail to comply with their regulatory obligations … investors may experience poor outcomes,” the SEC said.   

Shadowridge Asset Management, LLC is not a Robo-Advisor. We discourage the use of these automated computer programs because the biggest problems in the financial markets are caused by events that are unexpected and therefore cannot be neatly programmed into computers. To ensure that our proactive actions are undertaken solely in your best interest, each of our trades is planned and reviewed by humans, fiduciaries to you.   

If you are not yet a client of Shadowridge but want true fiduciary service, where your best interests are always our priority, call the office today to arrange a portfolio review and consultation. The number is 888-434-1427. Call now, before problems in the market have affected your investments.  


Source: SEC Slams Almost All Robo-Advisors With Deficiency Letters. https://www.fa-mag.com/news/sec-slams-almost-all-robo-advisors-with-deficiency-letters-64832.html