The Digital Fiduciary

Technological advancements continue to shape and define the advisory landscape.  We are amidst a digital advice revolution as automated technology platforms – robo-advisers – attract clients and assets, delivering solutions which provide ongoing discretionary investment management and portfolio rebalancing without the aid of a human advisor.  One of the interesting debates emerging from these technological changes is whether an algorithm-based model is a fiduciary or should be held to the standards of a fiduciary.  In general, human advisors have long been deemed fiduciaries by operation of law and by virtue of the relationship which exists between client and advisor.  But can the same be said for a digital platform where there is no (or extremely limited) interaction between the client and a human advisor?

For those of you who are closely following the “robo-advisor as fiduciary” debate you will want to read the recently published whitepaper from the Morgan Lewis law firm which concludes fiduciary standards do apply to digital advisers.  While not dispositive law, the whitepaper makes compelling arguments robo-advisors are fully capable of “fulfilling fiduciary standards that are consistent with the scope and nature of the advisory services they provide to clients.”

Certainly the whitepaper advances the debate as to whether digital advice is subject to fiduciary standards, and in time we will likely see greater clarity on this topic as courts or industry regulators weigh in.  Regardless of that outcome, Unified Trust Company  has always embraced its role as fiduciary in providing discretionary investment advice for its clients.  We firmly believe clients are best served by professionals who act as fiduciaries, honor the duty of loyalty, and otherwise adhere to the highest standards of care.

A link to the article can be found here: https://www.morganlewis.com/pubs/the-evolution-of-advice-digital-investment-advisers-as-fiduciaries

About Patrick Meyer view all posts

Patrick Meyer is the Director of Wealth Management Client Services for Unified Trust Company. He joined Unified Trust Company in 2009. He has over 20 years of experience and manages the teams that support the Wealth Management division’s sales, service and trust administration functions. He serves on the Wealth Management Trust Investment Committee and is leading projects to advance Unified Trust’s retirement income solutions.