Best AI for AdvisorsAI glossary for financial advisors
The AI words vendors, compliance teams and regulators use, defined in plain English. Each entry says why the term matters in an advisory firm and links to the tools and guides on this site that go further.
Written for advisors, CCOs and operations staff, not engineers. Regulatory entries link to the primary source.
A
- Agentic workflowA multi-step process where AI handles several steps in a row, such as notes to tasks to draft email, with people checking key points.AI basics
- AI acceptable use policyA firm's written rules for which AI tools staff may use, for what, with what data, and how output is reviewed and kept.Data and security
- AI agentAI that can take actions on its own to complete a task, such as updating a CRM, sending a message or filling a form.AI basics
- AI assistantA general-purpose AI chat tool, such as ChatGPT, Claude or Gemini, that answers questions and drafts or summarizes on request.Tools and features
- AI copilotAn AI assistant built into software you already use that suggests, drafts or summarizes as you work.Tools and features
- AI CRM featuresAI built into a client relationship manager, such as note summaries, email drafts, task suggestions or questions about client history.Tools and features
- AI estate document reviewTools that read wills, trusts and related documents and summarize who gets what, who's in charge and what's missing.Tools and features
- AI marketing compliance reviewSoftware that uses AI to flag possible problems in marketing and communications before compliance approves them.Tools and features
- AI meeting summaryA written recap an AI tool produces from a meeting transcript: key points, decisions and action items.Tools and features
- AI notetakerAn AI tool that joins, records, transcribes or summarizes client meetings and calls, often syncing notes and tasks to your CRM.Tools and features
- AI prospectingUsing AI to find, rank and research potential clients, and to draft outreach, based on data about people and firms.Tools and features
- AI tax return analysisTools that read a client's tax return and highlight planning opportunities, such as Roth conversion room or missed deductions.Tools and features
- AI washingOverstating or misrepresenting how a firm uses AI. The SEC has charged advisers for false AI claims under existing rules.Regulation and compliance
- AI website chatbotA chat window on a firm's website that uses AI to answer visitors' questions, book meetings or collect contact details.Tools and features
- Artificial intelligence (AI)Software that performs tasks that normally take human judgment, such as understanding language, spotting patterns or drafting text.AI basics
B
C
D
- Data processing agreement (DPA)The contract terms that set how a vendor may use, protect, share, keep and delete the data you give it.Data and security
- Data retentionHow long a vendor or your firm keeps data (recordings, transcripts, prompts, outputs) and when it's deleted.Data and security
- De-identificationRemoving or replacing names, account numbers and other details so a client can't reasonably be identified from the information.Data and security
- DeepfakeAI-generated audio, video or images that convincingly imitate a real person, often used in fraud and impersonation.Tools and features
E
- EmbeddingA list of numbers that represents the meaning of text, letting software find related documents by meaning rather than exact words.AI basics
- Encryption in transit and at restScrambling data so only authorized systems can read it, both while it moves over a network and while it's stored.Data and security
F
- Fiduciary dutyAn investment adviser's duty of care and duty of loyalty to clients under the Advisers Act, covering the whole relationship.Regulation and compliance
- Fine-tuningFurther training an existing AI model on a specific set of examples so it performs better at a narrow task.AI basics
- FINRA Rule 2210FINRA's rule on broker-dealer communications with the public, which applies whether a person or an AI tool wrote the content.Regulation and compliance
- FINRA Rule 3110FINRA's supervision rule: member firms must have a reasonably designed supervisory system, including for AI tools they use.Regulation and compliance
- Foundation modelA large, general-purpose AI model that other products are built on top of, such as the models behind major chat assistants.AI basics
G
H
- HallucinationWhen an AI tool states something false or made up as if it were fact, such as a wrong figure, rule or citation.AI basics
- Human in the loop (HITL)Keeping a person responsible for reviewing or approving AI output before it's used, sent or acted on.Regulation and compliance
- Hypothetical performanceUnder the Marketing Rule, performance results not actually achieved by any of the adviser's portfolios, such as backtests and projections.Regulation and compliance
I
L
M
- Machine learning (ML)A type of AI that learns patterns from past data to make predictions or classifications, rather than following hand-written rules.AI basics
- Model Context Protocol (MCP)An open standard for connecting AI assistants to other software and data, so the assistant can read from or act in those systems.AI basics
- Model training on customer dataWhen a vendor uses the data you put into its tool to improve or train its AI models, which may expose client information.Data and security
- Multi-factor authentication (MFA)Requiring a second proof of identity, such as an app code or security key, in addition to a password to log in.Data and security
- Multimodal AIAI that can work with more than one kind of input or output, such as text, images, audio and video, in the same task.AI basics
N
- Natural language processing (NLP)The field of AI that deals with understanding and producing human language, from search to summaries to chatbots.AI basics
- NIST AI Risk Management Framework (AI RMF)A voluntary framework from NIST for managing AI risks, with a 2024 Generative AI Profile. Many firms borrow its structure.Regulation and compliance
- Nonpublic personal information (NPI)Under Regulation S-P, personally identifiable financial information about a client that isn't publicly available, such as balances and tax data.Data and security
O
- OCR and document AI (OCR)Technology that reads text and figures from scans, PDFs and photos so software can extract and analyze them.AI basics
- Off-channel communicationsBusiness messages sent through apps or accounts the firm hasn't approved and doesn't capture, like personal texting or chat apps.Regulation and compliance
- One-party and all-party consentRecording-law terms: one-party means one participant can consent; all-party means everyone in the conversation must consent.Regulation and compliance
P
- Personally identifiable information (PII)Information that identifies a specific person, alone or combined with other data: name, address, Social Security number, account number.Data and security
- Predictive data analytics ruleA 2023 SEC proposal on conflicts from AI-type analytics at advisers and broker-dealers. The SEC withdrew it in June 2025.Regulation and compliance
- PromptThe instruction or question you give an AI tool, plus any text or files you include with it.AI basics
- Prompt engineeringWriting and testing prompts so an AI tool gives consistent, useful output for a specific task.AI basics
- Prompt injectionAn attack where hidden or malicious instructions in text, files or web pages trick an AI tool into ignoring its rules or leaking data.Data and security
R
- Regulation Best Interest (Reg BI)The SEC's standard of conduct for broker-dealers making recommendations to retail customers: act in their best interest.Regulation and compliance
- Regulation S-PThe SEC's privacy rule for client data at advisers and broker-dealers, amended in 2024 to require incident response and vendor oversight.Regulation and compliance
- Retrieval-augmented generation (RAG)An AI setup that first looks up relevant documents, then writes an answer based on them, so output is grounded in your sources.AI basics
S
- SEA Rule 17a-4 and FINRA Rule 4511The broker-dealer recordkeeping rules: SEC Rule 17a-4 on preserving records and FINRA Rule 4511 on books and records.Regulation and compliance
- SEC Marketing RuleRule 206(4)-1 under the Advisers Act, which governs investment adviser advertisements, including AI-written ones.Regulation and compliance
- Shadow AIAI tools staff use for work without the firm's approval, such as personal chat accounts or unvetted browser extensions.Data and security
- Single sign-on (SSO)Logging in to many business apps with one firm-managed account, so access can be granted and removed centrally.Data and security
- SOC 2An independent CPA's report on a service provider's controls for security and related areas, used in vendor due diligence.Data and security
- Speech-to-textTechnology that turns spoken words into written text. It's the first step in every AI notetaker.AI basics
- Sub-processorA third party your vendor uses to handle your data, such as the AI model provider behind a notetaker or CRM assistant.Data and security
- System promptStanding instructions that shape every answer an AI tool gives, set by the vendor, the firm or the user.AI basics
T
- TemperatureA setting that controls how predictable or varied an AI model's answers are. Lower is more consistent.AI basics
- Testimonials and endorsementsUnder the Marketing Rule, statements about an adviser by current clients (testimonials) or by non-clients (endorsements).Regulation and compliance
- TokenThe small chunk of text (often part of a word) that AI models read, write and are priced by.AI basics
V
Z
AI basics
- Agentic workflow
- AI agent
- Artificial intelligence
- Connector
- Context window
- Embedding
- Fine-tuning
- Foundation model
- Generative AI
- Hallucination
- Large language model
- Machine learning
- Model Context Protocol
- Multimodal AI
- Natural language processing
- OCR and document AI
- Prompt
- Prompt engineering
- Retrieval-augmented generation
- Speech-to-text
- System prompt
- Temperature
- Token
Tools and features
Data and security
- AI acceptable use policy
- Data processing agreement
- Data retention
- De-identification
- Encryption in transit and at rest
- Model training on customer data
- Multi-factor authentication
- Nonpublic personal information
- Personally identifiable information
- Prompt injection
- Shadow AI
- Single sign-on
- SOC 2
- Sub-processor
- Zero data retention
Regulation and compliance
- AI washing
- Books and records rule
- Fiduciary duty
- FINRA Rule 2210
- FINRA Rule 3110
- Human in the loop
- Hypothetical performance
- Incident response program
- NIST AI Risk Management Framework
- Off-channel communications
- One-party and all-party consent
- Predictive data analytics rule
- Regulation Best Interest
- Regulation S-P
- SEA Rule 17a-4 and FINRA Rule 4511
- SEC Marketing Rule
- Testimonials and endorsements
- Vendor due diligence
Most useful for compliance reviews
Start with these if you're reviewing an AI tool or a new AI use. For the full picture, see our AI compliance hub.
- SEC Marketing Rule Rule 206(4)-1 under the Advisers Act, which governs investment adviser advertisements, including AI-written ones.
- Books and records rule Rule 204-2 under the Advisers Act, which lists the records SEC-registered advisers must keep, including certain communications.
- Regulation S-P The SEC's privacy rule for client data at advisers and broker-dealers, amended in 2024 to require incident response and vendor oversight.
- Vendor due diligence Reviewing an AI vendor's security, data use, contracts and controls before your firm buys, and checking again over time.
- AI acceptable use policy A firm's written rules for which AI tools staff may use, for what, with what data, and how output is reviewed and kept.
- Human in the loop Keeping a person responsible for reviewing or approving AI output before it's used, sent or acted on.
- One-party and all-party consent Recording-law terms: one-party means one participant can consent; all-party means everyone in the conversation must consent.
- AI washing Overstating or misrepresenting how a firm uses AI. The SEC has charged advisers for false AI claims under existing rules.
- Off-channel communications Business messages sent through apps or accounts the firm hasn't approved and doesn't capture, like personal texting or chat apps.
- FINRA Rule 2210 FINRA's rule on broker-dealer communications with the public, which applies whether a person or an AI tool wrote the content.
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