AI Platforms Offer Financial Advice With Little Regulatory Oversight
AI companies providing investment guidance face far fewer restrictions than brokers and advisors, creating a regulatory gap that concerns the financial industry. Daniel M. Gallagher, chief legal officer at Robinhood Financial, warned regulators about the inconsistency at the Financial Industry Regulatory Authority's annual conference in Washington D.C. this month.
Brokers and investment advisors must follow strict rules when offering personalized advice or deploying AI tools to clients. AI platforms like Anthropic's ChatGPT operate without the same supervisory requirements, even as they expand their ability to place trades and deliver tailored recommendations.
"Claude can do it, and I can't," Gallagher said, referring to Anthropic's widely available chat service. Gallagher previously served as an SEC commissioner under the Obama administration.
The Financial Industry Regulatory Authority and the SEC have not explicitly prohibited firms from using AI for investment advice. But the current rules create inconsistency across the industry.
"It's mildly incongruous," Gallagher said.
New Partnerships Expand AI Financial Capabilities
ChatGPT recently expanded its financial services. OpenAI announced a partnership with Plaid Inc. to give ChatGPT users personalized financial advice based on data they share with the companies. Until now, ChatGPT could only offer generic recommendations like automating savings or budgeting tips.
Other brokerages have moved faster. Public and eToro launched AI agents that investors can program to execute covered call strategies or automate trading. Retail AI trading services like StockHero charge between $50 and $150 per month.
Regulators Face Pressure to Act
Gallagher urged regulators to close the gap quickly. He questioned why investors should receive advice from third-party AI platforms when brokerages could build similar tools internally with stronger data protections.
"Maybe they'll do better than the customer would have, but it raises so many issues," Gallagher said. He noted that third-party AI systems often rely on public data sources like Reddit rather than an investor's actual financial information.
Claude offers free access with usage limits. Users can upgrade to $20 per month or $240 annually for higher usage allowances. Robinhood charges 25 basis points of managed account assets annually, capped at $250 per year.
Anthropic did not respond to a request for comment.
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