Key Considerations and Challenges of using A.I. Note-Takers

Estimated Time to Read: 3 minutes

When Financial Advisors "breakaway" to "go independent", they oftentimes cite restrictions at their current firm as a driving factor. These advisors tend to be more entrepreneurial and oftentimes technology sits at the center of these crossroads.

As the CTO for tru Independence, I've been fortunate to have a front-row seat to the breakaway movement, working with dozens of the most innovative independent advisory firms across the country. The process of starting a new firm oftentimes begins with constructing a technology stack - deciding between things like CRM tools and Financial Planning software. As an RIA evolves, it's use of technology consistently sits at the top of most strategic planning discussions. Today, almost every conversation about FinTech starts or ends with "A.I."

One of the most promising and hottest A.I. applications in the RIA-space is the use of A.I.-driven note-taking tools. For anybody that has used one or seen a demo can attest, these tools offer immense potential to enhance productivity and streamline workflows. Rather than simply transcribing a meeting, A.I. tools can generate meeting summaries, highlight key discussions, identify different speakers, add charts and other visual aids, and provide you with a task list of action items to be accomplished after the meeting

Gone are the days of forgetting follow-up tasks or asking your staff to log your notes!

However, as with any new technology, especially in the heavily regulated world of financial services, the deployment of A.I. note-takers is not without challenges—particularly when we consider regulatory frameworks such as those from the SEC and FINRA. As such, the decision to use these tools should always include your Compliance and Technology teams.

Given tru's role as Chief Compliance Officer, we've worked with many firms whom have implemented AI note-taking tools and have experience drafting policies and procedures to make sure we follow the rules.

Let's first consider the Rulemakers.

A.I. note-takers can (and do!) make the case that they help facilitate compliance by automatically logging and storing notes. But as it stands today, those that adopt the tools must meet regulatory standards for data retention, encryption, and access control. 

As you've likely been told by your tru Compliance officer on numerous occasions, the SEC (and FINRA, if applicable) have strict rules governing the handling of client communications, documentation, and data retention. Here is a brief summary of the rules today:

1. SEC Regulations - The SEC has detailed requirements around recordkeeping and retention of communications, particularly under Rule 17a-4. In addition, financial firms must ensure that any AI-generated notes cannot be altered after the fact without leaving a clear audit trail. This means that the systems that your firm uses must be capable of proving the authenticity of records during audits or regulatory reviews.
   
   
2. FINRA Guidelines - FINRA has equally stringent rules on recordkeeping. Firms using AI note takers must ensure compliance with FINRA Rule 4511. This includes not only the content of notes but also ensuring that notes are stored in non-rewritable, non-erasable formats—an area where AI-based tools must be thoroughly vetted. Moreover, the use of AI note takers must be aligned with FINRA's Supervisory Control System (Rule 3110).
   
   
3. Cybersecurity - any system, including AI note takers, that handles sensitive financial information must be compliant with Regulation S-P, which governs the protection of customer information. This includes implementing encryption, access controls, and intrusion detection systems to safeguard data against breaches

What does tru Independence recommend?

At tru, our Compliance and IT team's work in tandem to ensure that our partner RIA's have policies in place that align with the regulatory guidelines, including archiving and data security.

Here are a few recommendations:

Carefully Select a Vendor: as mentioned before, you should involve your Compliance and IT team's in the decision making process to review archiving and data security guidelines. Other things to consider are how the tools integrate into the rest of your tech stack. At tru, our team has vetted many of the tools available and are happy to review with anybody interested.

Obtaining Proper Consent to Record: determine how you will inform participants that the meeting is being documented. For example, you can add a pop-up message, or you can leave the meeting assistant in the waiting room until you obtain verbal consent from your client.

Create a Written Firm Policy: Beyond letting employees know what tool to use, we recommend creating clear guidelines on how and for what purposes the A.I. notetaker can be used. Certain meetings may need to be confidential, while others may not. Having clear protocols ensures the tool is used effectively and can help reduce risks.

While the integration of A.I. note-taking tools in the RIA space has the potential to dramatically improve efficiency, enhance productivity, and ensure compliance, it’s critical to approach this technology thoughtfully. At tru Independence, we are committed to helping our RIAs make informed decisions when it comes to adopting new technologies. Whether it's A.I. note-taking tools or any other aspect of the tech stack, we are here to offer guidance and support every step of the way.