More than six in 10 advisory firms have no plans to build or use artificial intelligence tools or predictive analytics models for their clients in the future, according to a new survey of compliance professionals conducted by compliance services provider ACA Group.
Among respondents to ACA's 2024 Investment Management Compliance Testing Survey, 64% said they have no plans to use such tools, while only 30% said they are not currently using them but are “considering or actively building them.” Only 2% said they use such tools to “support clients' investment decisions.”
According to Carlo Di Florio, global advisory leader at ACA Group, even if companies aren't focused on developing AI capabilities, they understand that AI is a hot topic that everyone (including regulators) is interested in.
“Like us, AI has only emerged in the consciousness of most advisors in the last year or two,” he said, “and our impression is that only the most tech-focused firms were thinking about it long before that.”
That said, 46% of respondents cited AI as a major concern, a significant increase from the previous year when AI wasn't even on the list. But when it came to their company's approach to allowing employees to use AI tools and large-scale language models like ChatGPT, 39% of respondents didn't have a “formal” approach in place, and 28% formally permitted its use (in contrast, 12% of companies had a total ban on AI).
Notably, despite the Examination Division's investigation into advisors' use of AI, 64% of firms reported they had not taken any action: One in five firms reported they had created or updated policies and procedures regarding the use of AI, and 11% reported they had reviewed marketing materials to evaluate AI-related claims.
The survey, now in its 19th year, received responses from 595 companies, of which 44% had total assets between $1 billion and $10 billion, with the rest of the respondents being more evenly distributed. 43% of the respondents had between 11 and 50 employees.
The industry's “hottest” compliance topics have shuffled around this year. “Advertising/Marketing,” last year's biggest concern, has dropped to second place. Fifty-seven percent of respondents listed it as a top three compliance concern, compared to 70% last year. “Electronic/Off-Channel Communications” took the top spot with 59% naming it as a top three concern this year, compared to 35% in 2023. Fifty-two percent of companies cited cybersecurity as a major issue in 2023, compared to just 37% this year.
More than four in 10 firms limit advisor communications about business matters to business email and phone calls only, and 60% of firms report sharing some of the SEC’s recent enforcement actions regarding off-channel communications with employees for training purposes (83% of firms require advisors to certify that they are only using approved methods, while only 19% report checking employees’ corporate devices for breaches).
74% of companies reported that all marketing and advertising materials (including requests for proposals) go through a “formal” review process, while 55% of companies require regular employee training on social media policies, 34% allow social media posts from the company's company page to be reposted without approval, and 28% require employees to seek approval when making business-related social media posts.
