Regulatory requirements to run your own Robo-advisor
Generally, any type of Robo-advisor will be subject to rules, regulations, and guidelines set for financial services by local regulatory authorities. These guidelines may directly dictate the rules and boundaries for operating a Robo-advisor, or more often, for the broader class of digital advice services. Here are some typical items set out by such guidelines:
- Licensing types: The key question for most regulators is how Robo-advisors should be licensed, as that determines the exact requirements and reporting that such platforms must comply with. This question is not always black and white, as multiple licensing schemes may apply depending on the exact scenario each Robo-advisor is targeting with their business model.
- Advisory process: In certain countries, the level of detail of guidelines may include specific steps that should be followed while onboarding new clients. The intention is to ensure that such platforms comply...
