Gary Gensler Warns Financial Advisors About AI
[ad_1]
SEC Chair Gary Gensler issues a warning in a prepared testimony, highlighting the potential for financial advisors to place their interests above those of clients due to artificial intelligence (AI).
“Today’s predictive data analytics models also provide an increasing ability to make predictions about each of us as individuals,” he declared.
Gary Gensler Calls on Financial Advisors To Disclose AI Conflicts
According to a recent prepared testimony, the United States Securities and Exchange Commission (SEC) chair Gary Gensler highlighted the potential of financial advisory firms being able to use AI predictive analytics tools at the expense of its customers:
“If a firm’s optimization function takes the interest of the firm into consideration as well as the interest of the investor, this can lead to conflicts of interest.”
Gensler outlines that firms need to identify situations that allow firms to place its interests ahead of investors’ interests. He warns that firms will need to show efforts to eliminate or “neutralize” these conflicts.
He explains that this has been going on for several months. In July, the SEC issued a proposal to financial institutions to report on these conflicts when dealing with investors.
Gensler Has An Overall Positive Outlook For AI
However, he maintains an optimistic outlook on the adoption of this innovative technology in the financial sector:
“Such analytics and narrowcasting have the potential benefits of greater financial inclusion and enhanced user experience.”
On September 27, Gensler will be standing before the US House of Representatives Committee on Financial Services to deliver his testimony.
At the outset, he will emphasize that the views he expresses belong to him as the SEC chair. He is not representing the collective stance of his fellow commissioners.
From a macro perspective, Gensler has taken a relatively neutral position on AI.
He emphasized in a prior speech that AI has the potential to not only enhance the financial industry but also make significant contributions to healthcare and scientific advancements
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.
[ad_2]
Source link