The Financial Services Institute has released a new white paper on artificial intelligence that urges regulators to lean on existing conduct standards rather than create broad new AI specific rules for wealth management firms.
The paper argues that frameworks such as Regulation Best Interest and long-standing fiduciary and supervision obligations already address most investor protection issues that arise when firms use AI tools in advice, product selection and client communication.
“AI has the potential to streamline processes and enhance the client experience, allowing our members to focus on what they do best – serving their clients,” FSI President and CEO Dale Brown said. “However, it is not without its risks and requires thoughtful implementation and collaboration across the independent financial services industry to achieve successful adoption and ensure investor protection.”
FSI also cautions policymakers against using wide definitions that could sweep routine tools into high intensity oversight, including applications that handle note taking, drafting or basic analytics. Instead, the paper recommends a risk-based approach that scales expectations to the influence a given tool has on client outcomes.
The paper positions AI as a continuation of existing technology trends and frames the central regulatory question as how to apply current rules, not how to write an entirely new rulebook.
