More than six in 10 advisory firms have no plans to build or use client-facing artificial intelligence tools or predictive analytics models in the future, according to a new survey of compliance professionals by ACA Group, a provider of compliance services. compliance.

Overall, 64% of respondents to the 2024 ACA Investment Management Compliance Testing Survey said they did not plan to use such tools, compared to 30% of firms who said they are not currently doing so , but are “actively exploring or building” such. means. Only 2% of firms reported using such tools to “support clients' investment decisions.”

According to Carlo di Florio, global advisory leader at ACA Group, firms recognize that AI is a hot topic on everyone's minds (including regulators), even if those firms are not focused on developing AI capabilities.

“Like the rest of us, AI has emerged in the consciousness of most advisors over the past year or two,” he said. “It's our impression that only the most technologically focused firms were thinking about AI long ago.”

That said, 46% of respondents named AI as a top concern, a massive increase from last year when it wasn't even listed. But when it came to firms' approaches to allowing employees to use AI tools and large language models like ChatGPT, 39% of respondents had no “formal” approach, while 28% formally allowed their use. (In contrast, 12% of firms had a total AI ban in place.)

In particular, despite an Examinations Division sweep on the use of AI by counsellors, 64% of firms reported that they had taken no action in response. One in five firms reported that AI use policies and procedures had been created or updated, and 11% had reviewed marketing materials to assess AI-related claims

The survey (now in its 19th year) received 595 responses from firms, 44% of which had AUM between $1 billion and $10 billion, with other respondents relatively evenly represented. Forty-three percent of the firms surveyed employed between 11 and 50 people.

The industry's “hottest” compliance topics were reorganized this year. “Advertising/Marketing”, last year's top concern, dropped to second place; 57% of respondents named it as one of their top three compliance concerns, compared to 70% last year. Electronic/Off-Channel Communications took the top spot this year, with 59% naming it as a top 3 concern compared to 35% in 2023. Fifty-two percent of firms named cybersecurity a top issue in 2023 , but only 37% did so this year.

More than four in 10 firms limited advisors' communication about business matters to business email and phone. Sixty percent of firms reported sharing some of the recent SEC enforcement actions on off-channel communications with employees for training purposes (83% of firms required advisors to certify that they were using only approved methods, although only 19 % reported reviewing employees Corporate devices for violations).

Seventy-four percent of firms reported that all of their marketing and advertising materials (including requests for proposals) went through a “formal” review process. Meanwhile, 55% of firms required periodic employee training on social media policies; 34% allowed reposting of social media posts from the firm's corporate pages without approval; and 28% required employees to seek approval for any business-related social media post.