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July 24, 2023 at 03:48 PM
The Securities and Exchange Commission plans to consider Wednesday a plan to propose two separate rules — one for RIAs and one for BDs — related to the use of predictive data analytics, differential marketing and behavioral prompts.
Another item on the SEC’s open meeting agenda deals with a plan to exempt “internet advisers” — robo-advisors — from the prohibition against registration under the Investment Advisers Act of 1940.
Gail Bernstein, general counsel for the Investment Adviser Association in Washington, told ThinkAdvisor Monday in an email that “it’s not clear what the SEC intends to propose on the internet adviser exemption item so we’ll have to wait till Wednesday on that.”
The notice on the SEC’s website states the predictive analytics plan relates to conflicts of interest associated with broker-dealers’ and investment advisors’ “use of predictive data analytics in connection with certain investor interactions.”
Bernstein said the IAA expects the agency to “to issue a proposal relating to how advisers should address conflicts when they use technology (e.g., algorithms) to provide advice.”
Advisors, Bernstein continued, “are fiduciaries to their clients regardless of the method by which they provide advice, e.g., through a tech platform or over the phone. The magic of the principles-based Advisers Act is that it provides a flexible framework for advisers to tailor their practices to make sure that they meet their fiduciary obligations whether they use technology or not.”
