In July, the Securities and Exchange Commission (SEC) released a rule proposal that requires investment advisers and brokers who utilize artificial intelligence and predictive data analytics in their interactions with clients to "eliminate or neutralize" situations where technology prioritizes the interests of advisors or firms over the interests of the investors.

This rule would apply to "covered technology", which encompasses a firm's use of analytical, technological, or computational functions, algorithms, models, correlation matrices, or similar methods or processes that optimize, predict, guide, forecast, or direct investment-related behaviors or outcomes of an investor, as stated by the SEC in a fact sheet.

According to InvestmentNews, the rule's potential broad scope has sparked widespread criticism in the financial industry. For example, the ERISA Industry Committee, representing retirement plan sponsors, voiced concerns that the rule would encompass a wide range of tools used by investors daily, especially those related to retirement savings.

Andy Banducci, Senior Vice President of Retirement and Compensation Policy at the ERISA Industry Committee, called for the withdrawal of the proposed rule in a comment letter. Banducci also noted that the SEC rule would impose extensive review and documentation requirements on technology-based financial wellness programs designed for retirement plan participants. Banducci warned that if the rule is implemented, financial firms probably will provide less valuable information, reducing access for participating employees to financial wellness programs. 

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