Robo-advisor CEO: Here’s why I told clients they couldn’t trade in sell-off

Automated investment advisor Betterment suspended client trading amid Friday's market turmoil, in what the company's founder and CEO now describes as a good decision that should have been better communicated to clients.

"The only thing I would do differently is I would put a notification in the app and say, 'By the way, we delayed trading right now,'" Betterment's Jon Stein said Wednesday on CNBC's "Fast Money."

Betterment is one of the most prominent robo-advisors, which are known for their low costs and high degree of automation; The company reports managing $4.8 billion for 170,000 customers.

On Friday, as stocks tanked in reaction to the U.K. vote to leave the European Union, Betterment suspended all trading from the market open until about noon EDT, apparently without informing clients. While this is within the scope of its client agreements, other well-known robo-advisors declined to halt trading, and Betterment's move has raised eyebrows on Wall Street.

Stein, however, said that Betterment's sole goal was to act in the best interest of clients.

"In a time of extreme uncertainty, we wanted to be very careful about how we handled customer orders," Stein said. "Even if you have the best technology, you don't want to go out sailing into a hurricane."

Stein made the case that Friday morning was not the best time to execute trades, and that since "Betterment's customers are long-term investors," making money off of the market's next move did not loom large on clients' minds.

Interestingly, Friday's market mayhem did not seem to steer individuals away from the robo-advisor's services.

Not only did customers not leave Betterment, but "more people signed up on Friday than on a typical Friday," Stein said Wednesday.