Robo Advisors at the Regulatory Crossroads
April 13, 2018
As described by Baker in his Penn Wharton PPI brief on the topic, robo advisors—automated services that rank or match consumers to financial products—present opportunities and challenges to financial services markets and regulators that have yet to be systematically addressed. The opportunities include lower cost, higher quality financial advice, and a digital feedback loop that increases the efficiency of financial markets and consumer financial security. The challenges include possible manipulation and misunderstanding of automated advice, the potential for further consolidation of the financial sector, and threats to privacy and security that accompany digitalization more broadly. The workshop brought together academic and industry experts from diverse backgrounds, including IT practice, financial services, regulatory oversight, behavioral sciences, computer and data sciences, and law, to discuss the state of the art of robo advising, examine regulatory strategies, and think about future trends.