The Fiduciary Duties In Robo-Advisor

Under the background that "Internet + Wealth Management" continues to heat up,a large number of inexperienced investors have flooded into the financial market,Robo-Advisor gradually become known to the general public.While Robo-Advisor’s owner may use its dominant position to abuse their power or neglect their duties,how to effectively protect the civil rights of ordinary investors? A feasible path is to use the fiduciary duty to constrain the behavior of the Robo-Advisor’s owner.For this reason,this article analyzes the particularity in the Robo-Advisor’s fiduciary duties,and elaborates the core content of special fiduciary duties for Robo-Advisor’s owner.Except the part of introduction,the text is divided into four parts.The first part analyzes the particularity of fiduciary duties in the circumstances of RoboAdvisor.Like the traditional investment advisor,the owner of Robo-Advisor builds a fiduciary relationship with investors and undertakes fiduciary duties.However,due to the diverse content and concealed form of its interest conflicts,the conflict risks become more complicated;because of the gaps in professional competence,the full discretionary account management and the electronic contract forms,misconduct operations become easier to operate;the low level of Robo-Advisor’s development causes the limitation of information access;Robo-Advisor’s “Artificial Intelligence” character lead to the risk of algorithm design,software operation and maintenance,and network failure;as well as the risk of customer information protection brought by the implantation of Internet technology and Robo-Advisor technologies,have all lead to differences between the Robo-Advisor and the traditional investment advisor.Therefore,it is necessary to build a more special framework for the owner of Robo-Advisor’s fiduciary duties,that is,within the framework of the traditional investment advisor’s fiduciary duties,specific specifications and requirements should be made for the above-mentioned particularity in the specific structure of loyalty and diligence duties for Robo-Advisor’s owner.The second part is about the special loyalty duties in the Robo-Advisor.Unlike traditional investment advisor,there are more special requirements in the disclosure of interest conflicts and the rule of banning to seek improper interests for Robo-Advisor’s owner.On the one hand,when the Robo-Advisor’s owner disclose conflicts of interest,it should fully disclose its existing or potential special interest conflicts generated between security brokers,software developers,and itself.To prevent the Robo-Advisor’s owner from concealing charge information,it should also disclose all aspects of explicit charges,implicit charges and fee standards;the form of disclosure should be consistent with the characteristics of Robo-Advisor,and the regulations on liability for breach of disclosure obligations should be more strict.On the other hand,in addition to not receiving unreasonable remuneration,the behavior that RoboAdvisor’s owner collect service fees through excessive trading activities such as frequent transfer of stocks,and use discretionary accounts to invade customer funds should be specially prohibited.The third part is about the special diligence duties in the Robo-Advisor.Robo-Advisor’s owner should perform diligent duties with different requirements at all stages of providing services to customers.Compared with traditional investment advisor,the diligence duties of Robo-Advisor’s owner also have its particularities.First of all,in the process of formulating investment plan,it should make full use of the data processing capabilities of Robo-Advisor to collect and analyze product information as much as possible.To understand and analyze the clients’ needs,it should make the questionnaire more scientifically and reasonably,and use other supporting methods to matching analysis.Secondly,in the process of providing investment advice and continuous positions for customers,the intelligent algorithm for investment promotion and the basic theoretical model should be regularly evaluated and updated as needed;the main issues and operating procedures during the period of accepting Robo-Advisor’s services for investors should be explained by special instructions,and for certain special risks,suggestions must be made in the necessary manner.Finally,during the entire process of providing investment services,in order to fully protect customer’s account information and privacy information,special internal and external information security prevention and control mechanisms should also be established.The fourth part are suggestions for improving current related regulations.The current legal norm regarding the fiduciary duties of investment advisor does not pay much attention to RoboAdvisor.Therefore,the above-mentioned special rules should be introduced in the relevant legal regulations of investment advisors.In the process of introduction,the general rules of investment advisor should be adhered to and be differentiated for Robo-Advisor,and should reflect the idea of protecting the interests of investors at the same time.In terms of specific plans,the relevant provisions of the “Trust Law” can be applied through judicial interpretation,and detailed provisions on Robo-Advisor can be included in the “Interim Provisions on the Securities Investment Advisor Business” and other legal norms.