“We don’t see this as a major hindrance to the growth in this space,” McDermott said.
More Options
Some regulators see the rise of computer-driven investment advice as a positive for consumers, McDermott said. "They are giving consumers more options, dropping the price point and increasing the competition."
Last year U.S. Labor Department Secretary Thomas Perez pointed to Wealthfront as a robo-advisor that has been able to serve small investment accounts for a fraction of the price of human advisors while also acting as a fiduciary.
At a federal level the U.S. Securities and Exchange Commission issued an investor alert last May that cautions people about the limitations of automated investment tools.
Robo-advisors generally don’t provide personal investment advice and aren’t free from conflicts of interest, according to a 2015 research paper by Melanie Fein, a former Federal Reserve lawyer who analyzed some of the services’ customer agreements. They allocate groups of people into a mix of securities based on similar answers to online questionnaires and some use their own products or share revenue with the product providers, she wrote.
"For decades, we have given our customers access to our managed account services, through which investment management professionals provide fiduciary advice to help our customers reach their financial goals," Stephen Austin, a spokesman at Fidelity, said in an e-mail. "Our new digital advice offering, Fidelity Go, will provide our customers yet another managed account option."
A representative from Betterment declined to comment. Wealthfront supports efforts to ensure consumers understand differences between various robo-advisors and investment strategies they use. "This is why we have always put transparency at the core of Wealthfront’s service," Kate Wauck, a spokeswoman for the company, said in an e-mail.