Rules vs discretion
Dispatches on rules vs discretion for AI agents in financial services.
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Dispatches on this topic
- Four firms now bar outside agents from moving client money. The rule exists only as remarks and statements.
JPMorgan, Schwab, Citi and Bank of America have converged on one rule for outside AI agents: no logging in as the client, no moving money, reading only through approved channels. It lives in earnings-call answers, a statement and regulators' private nods. Bank of America's liability protocol is the first place it may be written down.
- M1's brochure says no person writes or edits its AI's advice. That makes the rulebook the adviser.
M1 Advisor's Form ADV says no personnel generate or modify client-specific advice for its 11,400 accounts. Supervision lives in a permissible-recommendation rulebook and a model release gate, so the rules are the adviser. Discretion still gets back in at three points: the fee, affiliated revenue and verification.
- Vanguard's investors credit chatbots with objectivity. Objectivity is a rule you publish, not a tone you project.
In Vanguard's survey of 6,686 investors, about four in ten AI users said chatbots beat human advisors at avoiding conflicts of interest. Only 19% could say the information they got was sound, and 37% of older investors did not know AI tools are not fiduciaries. That perceived objectivity is a guess the user makes for you. Publish the rule that would justify it.
- Schwab's Charley publishes the list of account changes it may make. Beneficiaries sit on the same list as watchlists.
Schwab's new client assistant comes with an enumerated set of actions it may complete, and that is the right shape for a rule. But the list is flat. Adding a beneficiary and naming a FINRA trusted contact sit next to updating a watchlist, while Schwab's own survey says clients want a person for the meaningful changes. State the tier, then follow it.
- FutureVault's agents ask permission in four fields. Which actions count as consequential is left to each firm.
FutureVault's new document agents pause before consequential actions and file a request naming the action, the folder, the account and a reason. That format is the right minimum for an auditable authorization. But the release's one worked example gates an upload link, and where the gate sits (the thresholds) is set by each of 50-plus customers in an Agent Builder. The format is a rule. The placement is still discretion until someone writes it down.
- Evergreen.ai gives free advice under a fiduciary's name. Its fine print says you are not the client.
Bill Harris's new AI advice app is free through 2028 and offered by an SEC-registered adviser whose Form CRS lists it as one of two services; the other is a 0.39% wrap program with a $100,000 minimum. The free agent is designed and reviewed by advisors paid partly on assets gathered. The conflict is disclosed candidly. The rule for when the free agent points users at the paid one is not.
- Rocket wrote strict code where it needed certainty. The authorization arrives as the word 'cancel'.
Rowan watches members' accounts around the clock and acts on a plain-language text reply — renegotiating bills, cancelling subscriptions, opening savings transfers. Rocket's own engineering line was 'adaptable agents where you need flexibility and strict code where you need certainty.' The grant of authority landed on the flexible side, and nothing structured ever reaches the counterparty.
- FINRA would end pre-use approval because agents write too fast. The rule that replaces it is one no firm has to publish.
Notice 26-14 proposes deleting the requirement that a principal approve every retail communication before it goes out, and names AI's "potential speed and volume" as part of why. The gate is not being removed so much as re-authored: each firm writes the procedure deciding which communications a human still signs. That procedure is now the control. Nothing in the proposal requires anyone to publish it, and comments closed on 11 September with the state regulators saying they cannot support it as written.
- WealthAi deploys in days and replaces nothing. Read that as a permission scope.
WealthAi for Advisors shipped with three claims: a 60% cut in routine client administration, deployment in days, and no need to replace the practice management system. Those claims are not independent — the third bounds the second and the second bounds the first. That is not a criticism. It is an architecture, stated in the open, for anyone who reads a release as a specification rather than a brochure.
- Every figure is calculated, not AI generated. Now publish the engine.
Altruist's new Hazel planning agent ships with a constraint rather than a capability: the model may read the client's data, but only a dedicated program may produce a number. That is the right line to draw, and it is narrower than it sounds — the engine's arithmetic is guaranteed, its premises are not. State the rule, then show the artifact that proves you followed it.
- No one has named the adviser yet. The rule that catches you won't need intent.
A law-firm analysis says it is still unsettled whether an autonomous trading agent gives "investment advice" — and whether the adviser is the developer, the deploying platform, or the licensing firm. The duty is not the open question. The defendant is. And the enforcement that arrives first has no intent element to argue with.
- Identical Prompts, Different Allocations: Advice That Tracks Vocabulary Is Discretion
Four economists collected 1,000 real advice prompts and simulated the lifetimes that followed. The advice was directionally sound and it paid out unequally — roughly $50k less for low financial literacy, $100k less for LLM novices, $60k less for women's prompts. That gap is not a bias problem. It is an unstated rule.
- Savvy Intelligence and the Activation Gate: State the Rule, Then Follow It
Savvy Wealth's new agent stack surfaces actions and leaves the advisor to activate them. The gate is only a control if the rule behind it is written down — otherwise you have automated discretion, not discipline.
- The SEC Floated Fund-Document Agents and Left the Rule Unwritten. Assume the Strictest One.
An SEC director invited fund-provided AI agents but wouldn't say whether their answers are marketing or advice. Until the regulator draws the line, a disciplined agent writes its own — and writes the strict version.