When the DoL fiduciary rule passed, many feared that small retirement accounts will be orphaned because the changing fee structure will make them unattractive to advisors. In response, others claimed that automated advice, or roboadvisors, should be able to swiftly, cheaply and compliantly sweep those accounts up. However, many top level officials, executives and legal experts have debated whether software-based, automated advice can truly client’s personal situation into account when issuing advice and conducting proper due diligence. Such solutions lend themselves to a one-size fits many model, experts say, and might not qualify as having the clients best interest. The DoL just issued its first FAQ, clarifying its position on the subject. The bottom line: roboadvisors that can act as level fee fiduciaries are OK. “There is a clear and substantial conflict of interest when an adviser recommends that a participant roll retirement savings out of a plan into a fee-based account that will generate ongoing fees for the adviser that it would not otherwise receive, even if the fees going-forward do not vary with the assets recommended or invested,” the DoL wrote in its FAQ. “The streamlined level fee provisions of the BIC Exemption cover roboadvice providers engaging in these discrete transactions.” The rationale for this exception is that charging a level fee eliminates any conflict of interest that arises from the traditional commission-based compensation structure. Level fee fiduciaries must still comply with the impartial conduct standards, which require fiduciaries to act in the best interest of their clients, charge no more than reasonable compensation, and make no misleading statements. This puts some robos in hot water, particularly those that are, in effect, distribution channels for proprietary products. The classic, plain vanilla, roboadvisors, like Betterment and Wealthfront, should feel pretty comfortable under the level fee exception. Incumbent-run digital portfolio managers, which tend to overemphasize their own financial products, might have a hard time complying with the impartial conduct standards. For example, though Schwab Intelligent Portfolio charges investors a level fee of $0, it does charge investors different fees for different products offered by automated advice. Under this scenario, there is a clear incentive to offer certain products and not others. This is exactly the type of conflict of interest the DoL sought to eliminate.