2018] REGULATING ROBO ADVICE 715
Indeed, the emergence of robo advice does not dispense with the role
people play in the industry. People design, model, program, implement, and
market these automated advisors, and many automated advisors operate
behind the scenes, assisting people who interact with clients and customers.
The history of people taking advantage of consumers in the financial services
industry is not a pretty one.2 Setting aside fraud and other unsavory activities,
the riches to be won by disrupting the financial services industry provide more
than enough incentive to rush technology to market. 3 In addition, there are
concerns that automation may entrench historical unfairness4 and promote a
financial services monoculture with new kinds of unfairness and a greater
vulnerability to catastrophic failure than the less coordinated actions of
humans working without automated advice.5
The challenges automated advice pose to regulators seeking to preserve
the integrity of financial markets do not stop there. There are well-known
privacy and security challenges that accompany the digitization of personal
financial data,6 and new regulatory challenges that are more specific to
white-papers/Documents/trend-financial-advisors-industry.pdf (demonstrating that investors can
gain advice from robo advisors at much cheaper costs than the fees charged by human advisors).
2. See, e.g., Daniel R. Fischel & Robert S. Stillman, The Law and Economics of Vanishing Premium
Life Insurance, 22 DEL. J. CORP. L. 1, 1–3 (1997) (describing the vanishing premium scandal in the life
insurance industry in the early 1990s); Neil Fligstein & Alexander F. Roehrkasse, The Causes of Fraud in
the Financial Crisis of 2007 to 2009: Evidence from the Mortgage-Backed Securities Industry, 81 AM. SOC. REV.
617, 617 (2016); Michael Corkery, Wells Fargo Fined $185 Million for Fraudulently Opening Accounts, N.Y.
TIMES (Sept. 8, 2016), http://www.nytimes.com/2016/09/09/business/dealbook/wells-fargo-fined-
for-years-of-harm-to-customers.html; Matthias Rieker, Broker Ordered to Pay More Than $1 Million in
Churning Case, WALL ST. J. (Oct. 13, 2014, 4:24 PM), http://www.wsj.com/articles/broker-ordered-to-
3. See Thomas Philippon, The FinTech Opportunity 14 (Nat’l Bureau of Econ. Research,
Working Paper No. 22476, 2016), http://www.nber.org/papers/w22476.pdf (discussing
disruptive innovations of Fintech startups).
4. See, e.g., WENDELL WALLACH & COLIN ALLEN, MORAL MACHINES: TEACHING ROBOTS RIGHT
FROM WRONG 55–56 (2009) (advocating to ensure that autonomous artificial agents are created with
morality); Solon Barocas & Andrew D. Selbst, Big Data’s Disparate Impact, 104 CALIF. L. REV. 671, 677
(2016) (describing discriminatory effects of data mining); Joshua A. Kroll et al., Accountable Algorithms,
165 U. PA. L. REV. 633, 637–38 (2017) (noting the challenges algorithms pose for procedural
regularity); Kate Crawford, Artificial Intelligence’s White Guy Problem, N.Y. TIMES (June 25, 2016), http://
www.nytimes.com/2016/06/26/opinion/sunday/artificial-intelligences- white-guy-problem.h tml
(“Sexism, racism and other forms of discrimination are being built into the machine-learning
algorithms that underlie the technology behind many ‘intelligent’ systems . . . .”).
5. See generally, CATHY O’NEIL, WEAPONS OF MATH DESTRUCTION: HOW BIG DATA INCREASES
INEQUALITY AND THREATENS DEMOCRACY (2016) (outlining dangers of rely ing on data analytics);
Dario Amodei et al., Concrete Problems in AI Safety (July 25, 2016) (unpublished manuscript),
https://arxiv.org/pdf/1606.06565v2.pdf (discussing “accident risk” that may emerge from the
poor design of the real-world AI sy stems). For an effort by the tech industry to add ress some of these
challenges, see PARTNERSHIP ON AI, https://www.partnershiponai.org (last visited Oct. 29, 2017).
6. See, e.g., Rick Swedloff, Risk Classification’s Big Data (R)evolution, 21 CONN. INS. L.J. 339,
339 (2014) (noting that “big data raises novel privacy concerns”); Press Release, N.Y. State Dep’t
of Fin. Servs., Governor Cuomo Announces Proposal of First-in-the-Nation Cyberse curity