
A new report from the Financial Industry Regulatory Authority (FINRA) relays that financial services firms’ offerings of digital investment advice need sound governance and supervision. These include effective means of overseeing suitability of recommendations, conflicts of interest, customer risk profiles and portfolio rebalancing. The report also outlines lessons for investors and says training and education are crucial for financial professionals who use digital investment advice tools. The report also noted that global spending on digital wealth management services is expected to increase drastically. The five key areas in which the report outlines effective practices are:
Governance and supervision of algorithms
Customer profiling, including assessing customer risk capacity and willingness
Governance and supervision of portfolios and conflicts of interest
Rebalancing, including descriptions of how rebalancing works
Training that enables financial professionals to understand limitation of digital investment advice tools. To sue a brokerage firm such as Vanguard, Charles Schwab, or others, please call our law firm.
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