The rapid adoption of AI technology across Canada’s financial services industry has significant legal implications for financial advisors, their firms, and their clients. As this technology becomes increasingly popular, it is worth noting where advisory firms stand regarding the potential legal risks associated with the use of this technology and AI.
Each dealership company has its own privacy and AI policy, respecting the fact that customer information must remain confidential. Some dealers will pay for licensed AI solutions. Some independent advisors buy off-the-shelf solutions.
Many dealership policies prohibit texting clients or using WhatsApp for discussions with clients. They are not protected by double authentication and do not protect client privacy. Communications regarding these applications are also not subject to supervisory scrutiny, which is the dealer’s obligation.
For the same reason, you cannot use ChatGPT for your client. Even if we do not mention your client’s name, there is no promise that your client’s information will remain private. Do not use this information to answer customer questions or enter customer information.
Our clients pay us because we are experts in our fields. ChatGPT is not a resource that you should rely on to develop or support the advice you provide to your clients. To best serve your client’s needs, you must examine your sources and apply your expertise.
Some companies pay for private AI solutions. My company licenses an enterprise solution that ensures both searches and results are private. However, these solutions are expensive. Not all dealers in the financial services industry are licensed for AI enterprise solutions.
If you plan to explore options for your practice, first read the relevant portions of your dealer’s policy manual to ensure that payment for and use of independent technology is permitted. Before using a network solution, determine whether dealer approval is required. Next, ask your dealer if they have any recommendations. (This may also apply to other software solutions licensed for other purposes, such as planning.)
If you are considering a solution that your dealer is not familiar with, you will likely need to send the details to them so they can review and approve. Please read the solution terms and conditions to ensure that the information you enter is private and will not be used for any purpose by the company providing the solution.
What about AI note-taking solutions?
One of the most common uses of AI technology is conversation recording and transcription. Obviously, this saves the advisor a lot of time and energy. However, there are also risks to consider.
- Technology isn’t always accurate. If a customer says, “I’m not worried about market fluctuations,” and the word “not” is lost in the customer’s voice or accent, the transcript might read, “I’m concerned about market fluctuations.”
- Transcripts do not reflect body language or tone of voice. During the recorded proceedings, the trial attorney will comment on any changes in body language or tone of voice that should be noted. For example, say something like, “Let me put on the record that the opposing attorney is yelling at my client at the top of his voice.” Advisors are not trained for this. That would be awkward too. The image of interrupting a client’s discussion and saying, “Please note that the client just winked at me and smiled, showing sarcasm.”
- Sometimes we forget that we are being recorded. The result of the discussion could be personal information that you don’t necessarily want compliance officers (or regulators or judges) to read. The advisor may be a close friend or family member of the client, and the conversation will reflect that. For example, you may not want your compliance officer to know about your own marital problems.
We will review the transcript immediately after the call and correct any inaccuracies. Remember the 5 C’s from my document? Accurate, up-to-date, complete, consistent, and contemporaneous.
My preference is to use the transcript to prepare my notes (and any other work I need to do) and then delete it. Tell your clients this is what you do.
If a client files a complaint and sue you, records (if kept) and notes will be included in the documents you are required to provide to regulators and opposing counsel.
Advances in AI have provided us with great tools, but we need to be aware of their limitations. Make sure their use protects your customers and complies with your dealer’s policies.
Advisors should be careful when choosing to use AI. Or would you prefer to just call my brother?
