Understanding Conflicts of Interest in Robo-Advisors

Conflicts of interest in the robo-advisory sector often stem from how advisors are compensated and how they structure their services. It's critical to recognize that no advisor setup is perfectly aligned with clients’ best interests. For example, while Betterment aims to provide independent advice by avoiding commissions associated with fund complexes or broker-dealers, they still face inherent challenges related to transparency. Knowing the fee structures and potential hidden costs, such as payment for order flow, can empower investors to make informed decisions when selecting a robo-advisor.