The Rise of Investment Robots

T. Rowe Price’s Diversified Small-Cap Growth Fund has outperformed 93% of its peers over the past five years, averaging a 10% annual return. Impressive—until you compare it to IWM, a small-cap index fund, which returned 9.28% in the same period. The real story, however, isn’t the performance itself—it’s how that performance was achieved.

Fund manager Sudhir Nanda relies on algorithm-driven technology to make investment decisions. While algorithmic trading is not a new concept, Nanda believes it’s the future of retail investing. As he puts it, “Having a human is still important. Humans aren’t going to be completely replaced, but they will be mostly replaced.”

Although many firms now incorporate algorithms, human-led stock selection remains the norm. Personally, I support outsourcing investment decisions to emotionless machines. The data is clear: individual investors routinely underperform the market. We once doubted that machines could drive cars or vacuum our floors—now we trust them with both. Portfolio management may be next.

Still, there’s a line. Financial planning—where money intersects with emotions, life goals, and complex personal decisions—isn’t ready for full automation. Investment selection may become machine-driven, but the human side of planning remains irreplaceable. At least until the robots gain feelings.

The Fine Line Between Negotiation and Deception

A recent case involving David Weimert, a former executive at AnchorBank, poses a compelling ethical question: how much deception is acceptable in financial negotiations?

Weimert was convicted of wire fraud after brokering a deal in which he misled both his employer and the buyer, falsely stating that each party wanted him to personally participate. He profited—no one else was harmed—and the deal closed. The conviction was eventually overturned by the Seventh Circuit Court.

Why? The court noted that deceptive tactics are common in deal-making. Think of car sales, where exaggerated or false offers are often part of the process. If the final terms are disclosed and no harm is done, is it really a crime?

This case shines a light on a broader issue in financial services: the gray area between strategy and misconduct. Unlike headline cases like Wells Fargo’s client misrepresentation or Edward Jones’ overcharging, which resulted in actual harm, Weimert’s actions didn’t. The court’s ruling suggests that not all deception is criminal—at least in the world of negotiation.

Too Big to Fail: Is It Really Over?

On April 21st, the FDIC’s chair declared that if a large U.S. bank were to fail today, it could be wound down in an orderly manner—either through bankruptcy or via the Dodd-Frank Act’s “Orderly Liquidation Authority.”

This statement came just as the New York Times published a headline noting that regulators had rejected the “living wills” of the nation’s top five banks. Their warning? These institutions still pose systemic risks and may be “too big to fail.”

So, who’s right—the FDIC chair or the regulators raising the red flags? In truth, both. The rejections aren’t proof that the system hasn’t improved—they’re evidence that regulators are demanding more. These living wills are designed to force big banks to prepare for self-rescue—without leaning on taxpayers.

The bigger message is this: unlike 2008, the expectation of government bailouts is no longer guaranteed. The financial system is being reshaped to be more resilient, with accountability at its core. The safety net hasn’t vanished—but it’s no longer automatic.

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