The AI Revolution is Coming to Financial Services—the SEC Says Don’t Wait Around for It

In an era of rapid technological growth, professionals across all industries are currently rethinking everything they know about their respective fields. For professionals who work in highly regulated fields, like financial advisers, many are anxiously awaiting government regulations to set the boundaries of appropriate artificial intelligence usage. ‘Don’t hold your breath,’ says the Securities and Exchange Commission.

On October 16^th, the Director of the SEC’s Investment Management Division, Brian Daly, spoke at the Stanford University Private Capital Roundtable where he remarked primarily on expanding investment opportunities for retail investors. Touting the Trump administration’s SEC as “the most pro-innovation SEC ever,” Daly implored investment advisors to implement artificial intelligence responsibly to benefit American investors.

Daly then addressed the elephant in the room—fears and trepidations regarding the rapidly changing landscape of artificial intelligence. To assuage those concerns, he described the SEC’s “fiduciary duty regime” as adaptive and flexible, and noted that the SEC views “progress” as being a consistent component of the fiduciary duties of care and loyalty. To further drive home his point, Daly told advisors not to “wait for regulators to hold your hands…because you may receive guidance that is both too limited and too late.”

In keeping with administrative law tradition, Daly asked the investment advisors to participate in an informal public comment period of sorts, asking them to point out any “roadblocks” they may encounter while implementing artificial intelligence—including whether any specific laws or regulations may prohibit such innovation.

These remarks closely echo statements that Daly made earlier this year at the Investment Company Institute Winter Board Meeting in February. In that speech, Daly quoted Giovanni Prezioso, former General Counsel of the SEC. In 2005, Prezioso noted that the SEC needed to address the shifting technological landscape by updating its rules on e-Delivery, books and records retention via email, and whether email communications fell within record retention requirements. Daly noted that, despite Prezioso raising these issues in 2005, none had been fully and finally addressed by the SEC as of 2026.

Daly then referred to the 2005-2026 period as a “lost generation of limited progress” before shifting to say that a new challenge—artificial intelligence implementation—had taken precedence. He acknowledged that many financial advisers have expressed concern that use of artificial intelligence could create significant liability exposure. However, Daly likened this concern to the kinds of worries that previously surrounded the use of algorithmic and quantitative models, which were successfully addressed through increased investor disclosures and heightened compliance practices. The same can be true now, in Daly’s view.

Near the conclusion of his February remarks, Daly posed a hypothetical, asking advisers to imagine investors interacting with a “fund- or adviser-provided [artificial intelligence] agent” that could answer their questions quickly and, perhaps most importantly, in “plain English.” Reducing the language barrier between advisers and investors could allow investors to quickly digest 200-page investment prospectuses using simple AI prompts such as What benchmarks do you think are useful performance comparisons? or Can you generate a comparison chart?

Daly acknowledged that this hypothetical artificial intelligence agent also raised important legal concerns, including whether this would amount to “marketing,” whether the agent would need to be registered as an investment adviser, and how the agent would be supervised. All of which, Daly reiterated, could be solved with responsible “collaboration” between advisers and regulators.

If you are an investment adviser considering incorporating artificial intelligence into your everyday workstreams, the SEC is supporting and encouraging these innovations. However, integrating AI systems into your practice will still require a constant, deliberate cost-benefit analysis, weighing the risks of greater efficiency and greater investor access against your prescribed fiduciary duties.

If you have any questions or concerns about how to implement artificial intelligence into your adviser practice, please contact James Heavey, Michael Ward, A.J. Monaco, Charlene Valdez Warner, or Thomas White.