Research On The Fiduciary Duty Of Robo Advisor Operators

Robo advisor is the product of the integration of technology and finance,which attracts many scattered investors with its advantages of low threshold,less fees,intelligence.However,robo advisor operators may take advantage of the algorithm-driven characteristics of robo advisor to obtain improper benefits or neglect their duties,which will harm the interests of investors.The effective way to protect investors’ rights and interests is to identify the legal relationship in the robo advisort as a fiduciary relationship,impose fiduciary obligations on the robo advisor operators,clarify the operators’ liability for breach of trust,reasonably allocate the burden of proof.In order to impose fiduciary duty constraint on the operators,the nature of legal relationship robo advisor clients must be analyzed first.There are three components of fiduciary relationship: first,the principal highly trusts the agent because of the agent’s professional competence and rich experience;Second,to facilitate the trustee to fulfill obligations,the principal grant a certain degree of authority to the trustee;Third,the agent assumes the role of the principal’s replacement,acts for the interests of the principal.Robo advisor properties is investment consulting or asset management,in investment advisory or asset management business,investors highly trust operators because of their professional and intelligent algorithms.When investors accept the services provided by robo advisor operators,they usually entrust some "power" to the operators.Robo advisor operators actively research and develop or promote robo advisor,publicize the advantages of robo advisor over traditional investment consulting,and attract a large number of scattered investors.The phenomenon indicates that operators will assume the role of proxy for clients and provide investment consulting or asset management services for the interests of clients.Therefore,the legal relationship in robo advisor can be defined as the fiduciary relationship.Although the business model of robo advisor has its particularity,but the operators also need to comply with the current fiduciary duty rules.However,the particularity of intelligent investment makes the fiduciary duty of current investment adviser unable to effectively constrain operators the.firstly,information of investors obtained from the questionnaire of robo advisor is not comprehensive,and the risk assessment of investors is not accurate.Secondly,the algorithm is not open and transparent,which leads to the imbalance of information between the two sides of the transaction and makes it difficult for investors to supervise operators.At the same time,in the process of providing services,there is a special form of hidden interest conflict risk,which is difficult for investors to detect.Finally,the robo advisor algorithm itself may be unsustainable,unreliable and has other risks.These characteristics challenge the current fiduciary duty rules of investment advisers,so the fiduciary duty rules of operators should be improved.America,Australia and Singapore have developed their own fiduciary duty rules.Although the rules of fiduciary duty formulated by the three countries draw lessons from each other,each has its own emphasis.The survey of robo advisor in the United States should be comprehensive,and relevant information of investors should be fully obtained,and the questions should be clear and easy to understand.The importance of interpersonal interaction in the questionnaire survey should be emphasized.Australia focuses on the monitoring and testing obligations of robo advisor operators to ensure the effectiveness and reliability of algorithms.In terms of the algorithmic governance obligation,Singapore has improved the "signing and verification process" of the internal governance of Australian algorithms,and clarified the algorithmic risk governance responsibilities of the governance layer and senior management layer.In terms of algorithmic information disclosure,it mainly drew lessons from some relevant regulatory documents of the United States and preliminary determined three reasonable boundaries of algorithmic information disclosure.We need to learn from the experience of robo advisor,which is developing well in the United States,Australia and Singapore.the basic positioning of fiduciary duty rules should be to provide inclined protection for investors and,the principle of "seller responsible,buyer responsible".On this basis,the rules of the appropriateness obligation of the robo advisor operators are clarified,the standards of explanation obligation are enhanced,the obligations of conflict of interest prevention are strengthened,and the standards of the duty of care are refined.It is clear that the liability for breach of trust of intelligent investment operators is tort liability,and the principle of presumption of fault should be implemented.Operators should prove that there is no causal relationship between their behavior and investors’ damage,so as to provide skewed protection for investors.