The SEC today published information and guidance for investors and the financial services industry on the fast-growing use of robo-advisers - registered investment advisers (RIAs) that use computer algorithms to provide investment advisory services online with often limited human interaction.

The SEC’s Division of Investment Management ….  has issued guidance for investment advisers with suggestions on meeting disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940.

Rochelle Kauffman Plesset, and Robert Shapiro from Investment Management contributed substantially to preparing the Guidance Update, with significant assistance from Investment Management’s Risk and Examinations Office and the Office of Compliance Inspections and Examinations (OCIE).

The SEC’s Office of Investor Education and Advocacy ….  has issued an Investor Bulletin that provides information individual investors may need to make informed decisions if they consider using robo-advisers.

The Investor Bulletin describes a number of issues investors should consider, including:

• The level of human interaction important to the investor
• The information the robo-adviser uses in formulating recommendations
• The robo-adviser’s approach to investing
• The fees and charges involved

Owen Donley, Jill Felker, and Holly Pal from the Office of Investor Education and Advocacy contributed substantially to preparing the Investor Bulletin.

Investors can also use the SEC’s Investment Adviser Public Disclosure (IAPD) database, which is available on Investor.gov, to research the background, including registration or license status and disciplinary history, of any individual or firm recommending an investment, including robo-advisers, which are typically registered as investment advisers with either the SEC or one or more state securities authorities.

Robo-advisers, as RIAs, …  are subject to the substantive and fiduciary obligations of the Advisers Act. The Guidance Update notes that there may be a variety of means for a robo-adviser to meet its obligations to clients under the Advisers Act, and that not all of the issues addressed in the Guidance Update will be applicable to every robo-adviser.