“AI opens up tremendous opportunities for humanity, from healthcare to science to finance,” Securities and Exchange Commission Chair Gary Gensler said in a speech on Monday at the National Press Club. “As machines take on pattern recognition, particularly when done at scale, this can create great efficiencies across the economy.”
The speech, “Isaac Newton to AI,” covered a brief history of the science behind AI and its possible uses. Yet, not surprisingly, given his current role, he detailed potential abuses as well, including possible fiduciary breaches on the part of financial advisors, product manufacturers, and investment managers. 
While not naming fiduciary specifically, he repeatedly referred to possible conflicts of interest from professional stakeholders.
“When communications, product offerings, and pricing can be narrowly targeted efficiently to each of us, producers are more able to find each individual’s maximum willingness to pay a price or purchase a product,” Gensler said. “With such narrowcasting, there is a greater chance to shift consumer welfare to producers.”
He worried advisors would put their interests in front of the consumers (and plan participants) they serve, something the Department of Labor’s fiduciary rule—officially known as the Conflict of Interest Rule—is meant to prevent.
“If the optimization function in the AI system is taking the interest of the platform into consideration as well as the interest of the customer, this can lead to conflicts of interest,” Gensler argued. “In finance, conflicts may arise to the extent that advisers or brokers are optimizing to place their interests ahead of their investors’ interests. That’s why I’ve asked SEC staff to make recommendations for rule proposals for the Commission’s consideration regarding how best to address such potential conflicts across the range of investor interactions.”
AI’s possible role in the financial space, and specifically retirement plans, has been the subject of intense discussion and curiosity recently.
One popular AI platform, ChatGPT, can interface with clients and prospects while analyzing data and drafting memos. In February, Neil Plein, Lead Consultant of Corporate Retirement Plans with Aldrich Wealth, decided to run portions of SECURE 2.0 legislative text through ChatGPT using the commonly cited ‘Summarize for a 2nd grader’ command. It did just that, creating an easy-to-read explanation of SECURE 2.0 Section 101.
