Best AI for AdvisorsWhat is the books and records rule?
Also called: Rule 204-2, recordkeeping.
Short answer
Rule 204-2 under the Advisers Act, which lists the records SEC-registered advisers must keep, including certain communications.
Definition
Rule 204-2 under the Investment Advisers Act, the books and records rule, lists the records SEC-registered investment advisers must make and keep, how long and in what form. It includes certain written communications, such as those relating to recommendations or advice.
For broker-dealers, the parallel rules are SEA Rule 17a-4 and FINRA Rule 4511.
The rule focuses on what a record says and does, not the tool that made it. An email, a text or a summary stored in an AI tool can all be records if they fall into one of the rule's categories.
Why it matters for advisors
AI tools create a lot of new material: transcripts, summaries, chat logs, drafts. Some of it is likely a required record; some may not be. Our recordkeeping guide walks through how firms decide, and why an AI-drafted follow-up email that recaps recommendations is almost certainly a record once it's sent.
Related terms
- 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.
- Off-channel communicationsBusiness messages sent through apps or accounts the firm hasn't approved and doesn't capture, like personal texting or chat apps.
- Data retentionHow long a vendor or your firm keeps data (recordings, transcripts, prompts, outputs) and when it's deleted.
- AI notetakerAn AI tool that joins, records, transcribes or summarizes client meetings and calls, often syncing notes and tasks to your CRM.
Learn more
Sources
Not legal or compliance advice. This is a plain-English summary for general education. Rules change and depend on your firm's facts, so check the primary source and talk to your CCO or counsel before relying on it.
Last updated .