How to Use AI Tools and Keep Client Data Safe

Artificial intelligence (AI) is making its presence felt across multiple industries, including the financial services space. While AI is unlikely to completely replace advisors, more financial professionals are using this technology in running their businesses. If you count yourself among them, or plan to, it’s important to consider establishing security standards for AI tools when accessing client contact information and other data.

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Understanding AI Security Risks

Speed and automation are two of the biggest draws associated with AI. Advisors are using AI tools to perform essential, but tedious, tasks faster and more efficiently. Some of its practical uses include content generation, investment research, data analysis and the automation of back-office processes.

There are, however, some substantial risks associated with what is still a developing technology. For advisors, the greatest concerns include:

• Data breaches. A breach that exposes sensitive client data, or data about your firm, could be devastating on multiple levels. Client accounts could become targets for fraud, while your brand reputation may take a serious hit.
• Noncompliance. The SEC’s cybersecurity rule requires advisors to disclose and report cybersecurity incidents promptly, and take proper measures to prevent breaches from occurring. Using third-party AI tools could put your firm at risk for cybersecurity incidents or noncompliance if those tools have significant vulnerabilities.
• Unauthorized use. Cyberattacks from external sources are a major concern for advisors, but there are internal risks, too. If an AI tool lacks controls that allow you to determine who can view client data, that raises the risk of unauthorized persons being able to access it.

Limiting the client data you share with the tool or tools you use can create a safeguard of sorts. However, that may make the results you receive from the tool less reliable if you’re using it for investment analysis, portfolio management or marketing. AI tools are only as good as the data they’re trained on, so if you’re limiting which client data the tool can access, that could make it less useful overall.

Security Standards for AI Tools Accessing Client Contact Information and Other Data

A comprehensive security plan can help you better protect your clients’ data and minimize risks when using you’re AI as a part of your business. The following are some strategies you can consider for developing stronger security standards for AI tools that have access to client information.

1. Vet AI Tools Thoroughly

Due diligence matters when it comes to selecting AI tools. Before adding a new tool to your tech stack, ask yourself the following questions:

• What client data will the tool collect, or have access to?
• How does the tool process and store the data it collects?
• How does the tool use client data?

Once you understand the tool itself, dig into the company behind it. Review the provider’s privacy and data security practices. If a company is reluctant to share this information with you or answer questions about its security protections, that could be a sign to look elsewhere.

While it may be tempting to choose free AI tools for their cost-efficiency, privacy protections may not be as strong as they are with paid options. Enterprise AI tools, generally speaking, may offer the strongest level of protection when it comes to keeping client data safe. The trade-off is that they typically come with the highest price points.

2. Establish Usage Boundaries

When using AI tools, it’s important to create a clear, written framework for what type of client data they will or will not have access to. Your policy can also establish data controls for who among your team will or will not be privy to the data. If certain client information should not be accessed, you can state that explicitly in your policy, as well.

Look for AI tools that allow you to set access controls internally and include built-in security features. For example, a tool that requires multifactor authentication may cut down on the risk of someone accessing client data when you haven’t authorized it. Encryption can also add another layer of security protection around client information.

Once you have your policy in place, review it with all of your employees. You may also consider hosting a training or information session to discuss the specifics of how the tool will be used. You can use this as an opportunity to refresh your team with the SEC’s cybersecurity compliance rules and discuss how to identify potential security risks or weak points.

3. Monitor Changes

Tracking access to client data and, more importantly, changes to that data, can help to preserve its integrity when using AI tools. A good compliance software or customer relationship management (CRM) platform can help you create a digital paper trail of every change that’s made to client files.

Both Salesforce and Wealthbox, for example, offer data tracking capabilities. You may also conduct routine audits or stress tests of your security system to look for weak points. Keeping a human hand on everything means there’s less room for error, or for client data to be compromised.

While monitoring can ensure that client data is not being abused or manipulated, and that your team is adhering to your security protocols, there’s an unintended benefit, as well. Ensuring that client data is recorded accurately can also improve the overall accuracy of any AI tools you’re using.

4. Get Consent

AI use and client consent are something of a gray area. Neither the SEC nor FINRA has specific rules requiring advisors to get client consent when using AI tools. However, there are rules in place regarding client data and privacy, communications with clients and the supervision of associated persons.

Those rules could be applied to AI use if it involves clients’ sensitive information. State laws, meanwhile, may require advisors to make disclosures about AI use.

Getting clients’ consent to allow any tool you use to access their data is a general best practice to observe. Some clients may wish to opt out, while others may want to learn more about how the tool works and the security standards your firm uses to safeguard their data. Being fully transparent regarding AI use can help to build trust, which is important for maintaining client loyalty.

Bottom Line

Establishing security standards for AI tools can help protect both you and your clients. If you’re still considering whether to use AI for your business, ask yourself what you would like AI to do for you. For example, do you want to create automated workflows for back-office tasks so you can spend more time with clients? Or are you interested in using AI to analyze client portfolios? The scope of what you plan to use AI for can help you narrow down which tools make the most sense for your business.

Tips for Growing Your Advisory Business

• AI can give your marketing efforts a boost if you’re using it to develop ad campaigns, create email newsletter content or automate prospect communications. If you’re hoping to connect with new leads, you may also consider partnering with an advisor marketing platform. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Using an AI note-taking tool can help make navigating client meetings easier. These tools take down what you and your clients discuss and generate a summary for you once the meeting ends. Some of the most advanced tools may also craft content for you that you can use for follow-up emails to keep prospects and clients engaged.

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