Page 40 - Profile's Unit Trusts and Collective Investments 2021 issue 2
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CHAPTER 1
A robo-advisor platform typically requires the investor to complete online risk-tolerance and
risk-capacity questionnaires (see chapter 6) and makes investment recommendations based on the
investor’s responses.
According to the FSCA’s Fit and Proper requirements, robo-advice (or ‘automated advice’) is
defined as “the furnishing of advice through an electronic medium that uses algorithms and
technology without the direct involvement of a natural person.” In order to comply with FAIS, an
FSP that provides robo-advice must employ at least one key individual who meets the FSCA’s
competency requirements. These include a technical understanding of the algorithms used in the
robo-advice process. An FSP using a robo-advice platform must monitor and review the automated
advice generated on an ongoing basis and ensure it is sound and FAIS compliant.
As more and more firms begin incorporating elements of robo-advice into their online services,
the lines between traditional financial advice and robo-advice may become blurred, especially
where robo-advice platforms provide access to human-assisted online services on a needs basis.
38 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts
