11/3/2021

AMAC Evolution of Advice

The pace of innovation in the provision of advice & guidance to individual investors, fueled by advances 

in the combination of data and technology,1 holds great promise for increasing financial inclusion and 

accelerating the democratization of products and services previously reserved for the more affluent. 

However, certain technological advances could raise potential risks,2 highlighting the need to ensure 

investor protection is being addressed. It is in that spirit that we submit the following principles for 

consideration by the SEC as the Commission evolves its approach to regulating the application of this 

innovation:

1. Encourage Innovation that Benefits Investors –Any regulation in this space should support 

continued innovation of rapidly-developing technologies that encourage beneficial interactions 

and improved outcomes for investors,

3 and efforts should be made to reconsider whether existing 

regulations are an impediment to, or inconsistent with, innovation, including but not limited to 

rules governing the use of electronic storage media to maintain and preserve required brokerdealer records4

, and expansion of the use of electronic delivery for regulatory communications.

2. Focus on Transparency – Consideration should be given as to whether current disclosures 

regarding data practices are effective and sufficient or whether modifications or additional 

disclosure may be warranted to better inform investors of the use the data being utilized to obtain 

the results provided.

3. Provide Data Controls – Investors should be able to decide whether to provide specific data to a 

particular party, monitor who has access and revoke access as needed. The process for opting 

out should be easily understandable and executable.

4. Consider Disparities in Technology-based Prompts – Industry participants should consider 

employing controls to identify and mitigate any embedded biases or disparities in the application 

of technology-based prompts being directed to retail investors that encourages investor behavior 

 1 See Pew Research Center, Mobile Fact Sheet (2019), at https://www.pewresearch.org/internet/fact-sheet/mobile

(as of April 2021, 97% of Americans owned a cellphone of some kind, up from 62% in 2002; the percentage did not 

deviate for those Americans earning less than $30,000 per year. Of those Americans over 65, 92% owned 

cellphones). The Pew Research Center further reports that, as of early 2021, 85% of Americans say they go online 

daily. See https://www.pewresearch.org/fact-tank/2021/03/26/about-three-in-ten-u-s-adults-say-they-are-almostconstantly-online. 2 See SEC Request for Information and Comment on Broker-Dealer and Investment Adviser Digital Engagement 

Practices, Related Tools and Methods, and Regulatory Considerations and Potential Approaches Information and 

Comments on Investment Adviser Use of Technology to Develop and Provide Investment Advice, Release Nos. 34-

92766; IA-5833; File No. S7-10-21 (August 27, 2021), at 46, available at https://www.sec.gov/rules/other/2021/34-

92766.pdf (“SEC Request”). 3 See SEC Request at 8-9 (“The use of DEPs carries both potential benefits and risks for retail investors. Simplified 

user interfaces and game-like features have been credited with making investment platforms more accessible to 

retail investors (in particular, younger retail investors), and assisting in the development and implementation of 

investor education tools. Others have noted that DEPs can encourage retail investors to increase their 

contributions to retirement accounts and to engage in other activities that are traditionally viewed as wealthbuilding exercises.”).

4 SEC Rule 17a-5.
11/3/2021

that promotes conflicts of interest, with reference to existing rules and guidance from the 

Commission and FINRA. The Commission may want to consider further study to consider whether 

additional guidance regarding participant compliance with this principle is necessary.

5. Regulation Should Be Technology Neutral Where Appropriate – To the extent additional 

regulation is necessary, it should be technology neutral where appropriate and not based solely 

on the presence or type of technology used in providing investment advice, which could create 

an unlevel playing field.