Best AI for AdvisorsWhat are off-channel communications?
Short answer
Business messages sent through apps or accounts the firm hasn't approved and doesn't capture, like personal texting or chat apps.
Definition
Off-channel communications are business messages sent or received on channels the firm hasn't approved and doesn't archive: personal text messages, WhatsApp, personal email. Our AI policy template defines it the same way: a business communication through an app, account or channel the firm hasn't approved for business use and doesn't capture.
The SEC's off-channel initiative made this a major enforcement area. In fiscal 2024 the SEC brought recordkeeping cases with over $600 million in civil penalties against more than 70 firms, according to its enforcement director.
Why it matters for advisors
AI tools can create new off-channel risk. An advisor messaging a client from an unapproved AI app, or a client-facing chatbot whose logs aren't captured, produces business communications the firm can't produce on request.
The fix is the same as for texting: approved channels that are captured, and a policy that says so.
Example
A firm's review finds an advisor used a personal AI app's built-in messaging to send a client a summary. The firm adds the scenario to its training and blocks the app on firm devices.
Watch out for
If an AI tool can send messages, ask whether those messages are archived before you turn the feature on.
Related tools
Disclosure: Some links on this page may be affiliate links, which means we may earn a commission at no extra cost to you. Listings are independent and sponsored placements are always labeled. Learn more.
Related terms
- Books and records ruleRule 204-2 under the Advisers Act, which lists the records SEC-registered advisers must keep, including certain communications.
- 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.
- Shadow AIAI tools staff use for work without the firm's approval, such as personal chat accounts or unvetted browser extensions.
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 .