Fiduciary Robo-Selection is Possible in a New Fund Order
By J.B. Beckett
Author and Founder, New Fund Order
Computers can be clever, yes, but surely they lack any inherent sense of self, humanity or ability to act fiduciary, at creation? Could they? Hot on the heels of robo-advice, robo-selection, as it relates to the selection and research of mutual funds, is the next frontier for FinTech. As more assets move to index-based and systematic strategies, so the dynamics of fund research are changing. How then can robo-selectors put the client above all others? Friedrich Nietzsche wrote that morality was the herding instinct of the individual . If true, then that herding behaviour could be defined and mapped.
The concept of “fiduciary” certainly goes well beyond selecting the cheapest passive fund and leaving it there for 25 years. Fiduciary has also expanded into political, society and environmental levels through industry initiatives like the UN Principles for Responsible Investment (PRI) and Sustainable Development Goals. However, the very discharge of fiduciary itself could be more transparent, for example does an investor require a human to offer a fiduciary service or indeed to be a fiduciary fund selector? Could computers act in a fiduciary manner? First, consider that human decisions litter history with malfeasance: Madoff, Arch Cru, boiler rooms, LIBOR-rigging, flash boys and so on.
Computers are not predisposed to wrongdoing, only programmed to do so – a thought for the ...
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