Bogleheads® Live Dan Egan: robo-advisor conflicts of interest
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Jul 25, 2022 
Dan Egan, VP of Behavioral Finance and Investing at Betterment, dives into the hidden conflicts of interest within robo-advisors. He explores how these automated platforms may compromise unbiased financial advice, discussing payment for order flow and its implications. Egan emphasizes the necessity for transparency in investment management, urging clients to be cautious of seemingly free services that may come with hidden costs. He also highlights the importance of personal engagement alongside technology in making sound financial choices.
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Payment for Order Flow
- Payment for order flow means custodians/robos may prioritize profit over best trade prices for clients.
- This can result in smaller investment returns for clients; avoid such platforms or hidden commissions.
Pay Your Advisor Directly
- Ensure your advisor's compensation comes directly from you, not third parties.
- "Free" services often hide costs; direct payment ensures aligned incentives.
Eating Their Own Cooking
- Dan Egan's family and Betterment employees use Betterment.
- This aligns incentives and provides direct feedback on the service.