Do Robots Rule Wealth Management? A Brief Legal Analysis of Robo-Advisors

Article Article scientifique Article Do Robots Rule Wealth Management? A Brief Legal Analysis of Robo-Advisors eng 2022 author Hirsch Célian 0009-0009-7967-406X 846801 author Merlino Nastassia Yasmina 871608 p.33-50 1662-8705 What are the legal duties of robo-advisors in Switzerland? In this article, we focus on the legal framework arising from Swiss financial market law, contract law and data protection law. We also make a comparison with European law. We first explain how robo-advisors work and conclude that, contrary to what their name may suggest, they are primarily portfolio managers. As financial service providers, they shall first establish the client’s profile and the investment strategy. They must also provide information on “the financial service personally recommended” (Art. 8(2)(a) FinSA). Therefore, they must explain that the investment decisions are based on algorithms. Nevertheless, they do not have to provide an in-depth explanation of the functioning of these algorithms. Under contract law, these same duties (establishment of the client’s profile and the investment strategy, duty to inform) arise from the service agreement (Art. 398(2) CO). However, the analysis of civil liability may be more complex. Under the new Federal Data Protection Act (FDPA) and the General Data Protection Regulation (GDPR), robo-advisors may specifically have to comply with the “Automated Individual Decision-Making” legal mechanism (Art. 21 FDPA and Art. 22 GDPR) when clients invest a large amount of their assets through robo-advisors. Consequently, they must inform the client that the investment decisions are automated. They must also, on request, explain the logic involved in the automated decisions. However, they have no obligation to disclose their algorithm. Robo-advisors (robots conseillers) Gestion de portefeuilles Décision individuelle automatisée Protection des données Droit européen Droit suisse Droit bancaire Gestion de patrimoine Robo-advice Contract law Wealth management Financial services Algorithms Data Protection GDPR Financial market law Dewey 346.082 104 Centre de droit bancaire et financier 5A false Schweizerische Zeitschrift für Wirtschafts- und Finanzmarktrecht 94 1 8f378c6e-0b91-4e27-8637-17b5e420d126 Article (Published version) Public Hirsch Merlino (2022) on robo-advi.pdf 2060637 application/pdf Private 2022-09-12 openAccess Faculté de droit / Centre de droit bancaire et financier

Title	Published in	Access level	OA Policy	Year	Views	Downloads

Do Robots Rule Wealth Management? A Brief Legal Analysis of Robo-Advisors	Schweizerische Zeitschrift für Wirtschafts- und Finanzmarktrecht			2022	951	316

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Merlino, Nastassia Yasmina