Technology from Vestwell, Fiduciary Shield by BidMoni, and Betterment recently announced Advised 401(k) are making it easier than ever for advisors to offer retirement plans to business-owner clients. By taking on much of the heavy lifting, these tools can make it look easy for any financial planner to moonlight as a retirement plan advisor.

But advisors thinking about entering the retirement plan space as a path to easy money should think twice before jumping in. Deciding to extend your niche market from serving doctors to serving doctors and dentists is one thing. Taking on the mantle of a fiduciary under ERISA is quite another.

The key question is whether a program that purports to give personalized advice to plan participants is using tools that are well-designed for that purpose. In 2015, not long after robo advisors arrived on the scene, the SEC’s Office of Investor Education and Advocacy and FINRA issued a joint investor alert discussing the risks and limitations of automated investment tools. They warned that robo advisors may rely on incorrect assumptions that do not apply to investors’ individual situations.

“Be aware that a tool may ask questions that are over-generalized, ambiguous, misleading, or designed to fit you into the tool’s predetermined options,” the alert stated.

The Massachusetts Securities Division has also expressed concern, stating in 2016 that robos, “cannot fully satisfy their fiduciary obligations” because of their depersonalized nature and inability to provide ongoing due diligence.

As far as I’m aware, no regulatory authority has ever brought an action based on a robo’s failure to meet applicable fiduciary standards, either under ERISA or the Investment Advisers Act of 1940. But advisors should be aware that this issue still lurks unresolved.

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