Disclosing AI use to clients: what to tell them and where

Is there a rule that requires an AI disclosure?

Our Marketing Rule guide notes that the Marketing Rule "doesn't contain an AI-specific disclosure requirement," and FINRA's Regulatory Notice 24-09 says it doesn't create new requirements. We haven't found any SEC or FINRA rule that requires a firm to tell clients, in so many words, that it uses AI. Have your counsel confirm that for your firm, since state rules and your own contracts can add requirements.

That doesn't mean you can stay silent and be fine. The question isn't "is there an AI rule?" but "do our existing obligations require us to say something about how we use AI, and is what we already say accurate?" The next sections walk through the obligations that usually answer it.

Fiduciary duty and full and fair disclosure

The SEC's 2019 interpretation of the standard of conduct for investment advisers (Release IA-5248, June 5, 2019) describes an adviser's fiduciary duty as a duty of care and a duty of loyalty that apply to the entire relationship. The duty of loyalty includes making full and fair disclosure of material facts about the relationship and of conflicts of interest.

Applied to AI, the question for your CCO is whether anything about your AI use is material to a client. Some uses probably aren't (a tool that tidies up internal notes). Others may be: AI that shapes investment recommendations, a vendor relationship that creates a conflict, or client data used to train a third party's models. Where it is material, the fiduciary framework is what pushes you toward disclosure, not an AI rule.

Form ADV and the brochure

Form ADV Part 2A, the brochure, is where an adviser describes its advisory business, methods of analysis and conflicts. If AI plays a real part in how you analyze investments or build portfolios, ask whether your methods-of-analysis description still matches what you do. If it doesn't, the issue isn't missing AI language, it's an inaccurate brochure.

Questions to raise with counsel rather than answers: Does any AI tool materially affect how we form advice? Do we get anything from an AI vendor (discounts, revenue share, equity) that's a conflict? Do we use client data in a way clients wouldn't expect? Does our privacy notice describe how we share data with service providers, including AI vendors? If none of those apply, many firms decide brochure changes aren't needed and handle AI in the privacy notice, the client agreement or a plain-English FAQ instead.

What you say about AI in marketing

The SEC's Marketing Rule, Rule 206(4)-1, prohibits advertisements that include, among other things, an untrue statement of a material fact or a material statement of fact the adviser doesn't have a reasonable basis to believe it can substantiate on demand. FINRA's Rule 2210 has its own content standards for broker-dealer communications. Both apply to claims about AI.

The clearest warning is the SEC's March 18, 2024 settled actions against two advisers, Delphia (USA) Inc. and Global Predictions Inc., for "false and misleading statements about their purported use of artificial intelligence." The firms paid $400,000 in total civil penalties. Delphia was also charged with violating the Marketing Rule. The SEC's Division of Examinations says in its fiscal 2026 priorities that it will "review for accuracy registrant representations regarding their AI capabilities." See AI washing, SEC enforcement and exam priorities for detail.

So the rule for marketing copy is simple: only say what you do, in terms you could prove. "We use an AI notetaker so your advisor can focus on the conversation" is a fact you can substantiate. "Our AI finds the best investments" is a claim you probably can't.

• Every AI claim on the website, in pitch decks and on social media describes something the firm actually uses today.
• Each claim has a file showing what supports it (the tool, how it's used, who reviews the output).
• No claim implies AI makes the investment decisions unless it does, and if it does, that's described accurately in the brochure too.
• Marketing claims match what the brochure and client agreement say.
• AI claims go through the same review and approval as any other advertisement.

Where AI disclosures usually go

Firms that decide to say something usually put it in one or more of these places. Pick based on what the disclosure is for:

Example language to discuss with your compliance team

Example language to discuss with your compliance team, not approved disclosure text. Every firm's facts differ, so treat these as drafts to mark up, not wording to paste.

Meeting consent (spoken): "Before we start, we use an AI notetaker to record and transcribe our meetings so I can focus on you rather than on taking notes. The recording and notes are stored securely with our approved vendor and kept as part of your file. Are you comfortable with that? We can switch it off at any point."

Client agreement or onboarding (written): "We use technology tools, including artificial intelligence, to help prepare meeting notes, summaries and draft materials. Your advisor reviews this work before it's used. These tools don't make investment decisions for you. We share your information with technology providers only as described in our privacy notice."

Website FAQ: "Do you use AI with my information? Yes, in a few specific ways: [list]. We use only tools we've reviewed, under contracts that require the vendor to protect your information and tell us promptly about any security incident. We don't let vendors use your information to train public AI models. [Confirm this is true before saying it.]"

Marketing line: "We use AI tools to handle note-taking and paperwork, so more of your advisor's time goes to you." (Only if it's accurate and you can show how.)

Answering client questions about AI

Clients increasingly ask about AI directly. A short internal FAQ helps advisors give consistent answers. The questions we hear most are: Is a computer making decisions about my money? Who can see my recordings? Do you send my data to ChatGPT? Can I opt out? Your answers should match your policy, your vendor contracts and your privacy notice exactly. If an advisor isn't sure, the right answer is "let me check with our compliance team and come back to you."

Keep the internal FAQ with your AI acceptable use policy so it gets updated when the policy does.