Human advisors vs. robo-advisors: Will ethics trump compliance?

Similarly, Wealthfront offers a helpful investment strategy white paper, as well as robust "Who We Are" and "FAQ" website sections. Everything is clearly and simply written and easily accessible on their website. Transparency grade: A+.

Clearly, fee disclosures are a strong suit of the robo-advisors. For example, Betterment, which claims to be the largest player in the field, has created a fee-disclosure slider that graphically illustrates how costs decline from 0.35 percent of assets for account balances under $10,000, to 0.15 percent for those with a minimum balance of $100,000. This chart takes all the mystery out of fees, again building good will and consumer confidence.

But here's the rub: While robo-advisors may be great at compliance and transparency, they may fall short regarding ethics. Why? Because ethics is the domain of thought that defines the right way to act (or invest). Since automated investment platforms don't provide real-time guidance to investors on their investing (or spending) decisions, they may lack the true ethical judgment of human beings.

For example, a robo-advisor is ill-equipped to encourage clients to forego investing online until they augment their emergency fund, reduce credit-card balances, or set up a college saving 529 account. And they lack the ability to keep clients accountable by sticking with budgets and other financial commitments.

In short, if robo-advisors keep growing, we might see fewer compliance violations (and victimized seniors) and larger retirement balances due to the inherent robo-advisor efficiencies. Definitely a good thing for the industry and the public. But I believe ethics (as embodied in human advisors) will ultimately trump compliance (robo-advisors) because consumers will still need someone who can listen, give cutomized advice, and talk them off the ledge when the next market crash hits.