The financial services regulatory authority for the Netherlands Authority for the Financial Markets (AFM) released two documents stating their expectations regarding the developments of automated financial services. Market players are continuously developing automated advisory services for financial products, now also for more complex products. This way, consumers have easier access to potentially higher-quality investment products yet are also exposed to the risks entailed.

Requirements of high quality
The Act on Financial Supervision (Wft) doesn’t distinguish between automated and physical services. Both are subject to high quality requirements. However, automated services are linked to specific points of interest. By publishing guidelines for (semi-)automated asset management as well as their vision on robo-advisory, the AFM is looking out for the safety of consumers. The Authority assumes that relevant companies will take note of its publications and use it as guidelines for the further development of their products.

Vision on robo-advisory
As automated advisory services are growing in availability, the AFM aims to clarify the interpretation of these advisory services. In their publication, for instance, they clarify how a duty of care is involved with robo-advisory services and how it affects the Authority’s supervisory duty.

Importance of physical advice
The developments of physical and automated advisory services are not only dependent on technological innovates, but also on consumer demand. Thus, the AFM advises the use of (semi-)automated advisory services mainly for specific products. On the other hand, they underline the added value of physical advisory services when it comes to integrated advisory products and more complex customer situations.

By Michael Brooijmans, Research Analyst