Why Wealth Firms Must Adopt an AI Policy

The Imperative for an AI Acceptable Use Policy in Wealth Management

In today’s rapidly evolving business landscape, artificial intelligence (AI) has transitioned from a futuristic concept to a practical tool used across various industries. In the financial advisory sector, AI is now a common element of daily operations, with many professionals leveraging its capabilities to improve efficiency, analyze data, and streamline workflows. A recent study by Harvard University revealed that approximately 40% of American workers use AI technologies, with one in nine using them on a daily basis.

For investment advisory firms, the question is no longer whether to address AI usage but how quickly they can develop and implement a comprehensive policy. The widespread adoption of AI tools has outpaced the development of governance frameworks, creating a significant compliance gap. This gap poses risks related to data privacy, intellectual property, and regulatory compliance—areas that are especially critical in the financial services industry.

What an AI Acceptable Use Policy Should Include

An AI acceptable use policy serves as a guide for team members, helping them understand when and how to appropriately use AI technologies within their professional responsibilities. A well-structured policy should provide clarity around several key areas:

• Authorized AI Tools: The policy should specify which AI platforms are approved for use, such as large language models like OpenAI’s ChatGPT, Microsoft CoPilot, and Anthropic’s Claude. It should also include AI notetakers, marketing tools, and other relevant applications.
• Data Restrictions: Clear guidelines must be established regarding the types of data that can be processed through AI platforms. This includes restrictions on client personally identifiable information (PII), team member PII, and firm-specific data such as investment portfolio holdings.
• Security Protocols: The policy should outline necessary security measures when using approved AI technologies to protect sensitive information.
• Documentation Requirements: Team members may need to document their use of AI for regulatory or compliance purposes, ensuring transparency and accountability.
• Training Requirements: Before using specific AI tools, employees should receive training to ensure proper understanding and responsible use.
• Human Oversight: AI-generated results must be reviewed by qualified personnel to ensure accuracy and compliance.
• Client Transparency: Firms should communicate clearly with clients about the use of AI in their services.

Prohibited Activities

In addition to outlining acceptable uses, an AI acceptable use policy must explicitly define prohibited activities. These restrictions help prevent well-intentioned team members from inadvertently creating regulatory exposure. Common prohibitions for investment advisory firms include:

• No Inputting Client PII into General-Purpose AI Tools: This helps safeguard client data and maintain confidentiality.
• No AI-Generated Financial Advice Without Human Oversight: Any advice generated by AI must be reviewed by a qualified advisor.
• No Circumvention of Compliance Procedures: Employees should not use personal AI subscriptions for work-related tasks or input client information into unapproved systems.
• No Use of Unapproved or Consumer-Grade AI Platforms: Firms should avoid tools that may expose them to unnecessary risks, such as free AI models that use user data for training.
• No AI Impersonation: Using AI to mimic clients or colleagues is strictly prohibited.
• No Final Investment Decisions by AI: Humans must always have the final say in investment allocations.

Responsible Innovation

By establishing clear parameters for AI use, firm leaders can shape the adoption of these technologies in alignment with their values and compliance requirements. This proactive approach is essential given the increasing regulatory scrutiny of AI in financial services. Regulators are signaling a heightened focus on how firms govern AI tools, making it more important than ever to have a robust policy in place.

An AI acceptable use policy also demonstrates a commitment to responsible innovation, balancing technological advancement with risk management and client protection. Firms that take this step not only mitigate potential risks but also position themselves to leverage AI’s benefits effectively.

Conclusion

The integration of AI into wealth management is inevitable, but the way firms manage its use will determine their success and compliance. Developing an AI acceptable use policy is a critical first step toward responsible and effective AI implementation. By taking action now, firms can ensure they remain competitive, compliant, and aligned with their core values.