Is AI financial advice regulated?
Generally, yes — though not by rules written for AI. In the U.S., a firm giving investment advice through AI is regulated like any investment adviser, by the SEC or state regulators. The rules attach to the firm and its activity, not the technology; general-purpose chatbots usually sit outside them.
Who regulates AI financial advice?
The same regulators that oversee human financial advice. Which one depends on what the firm does, not on whether software produces the advice.
- Investment advisers — firms paid to give advice about securities — are regulated by the SEC or by state securities regulators. They operate under the Investment Advisers Act of 1940.
- Broker-dealers — firms that handle securities transactions for customers — are regulated by the SEC and by FINRA, and recommendations they make to retail customers fall under Regulation Best Interest.
A firm can be both. For the difference between advice and information, and who can legally give advice, see Why does AI say “this is not financial advice”?
Are there laws specifically for AI financial advisors?
No U.S. federal rule is written specifically for AI financial advice. Regulators have generally applied existing rules to AI and automated advice rather than writing new ones, and FINRA describes its rules as technology-neutral.
- The SEC set out how the Advisers Act applies to automated advice in its 2017 robo-adviser guidance, covering disclosure, suitable advice and compliance programs.
- FINRA said in Regulatory Notice 24-09 (June 2024) that its rules continue to apply when member firms use generative AI, and that the notice creates no new requirements.
- An AI-specific rule was proposed and withdrawn. In 2023 the SEC proposed a rule on conflicts of interest in firms’ use of predictive data analytics, including AI. It withdrew the proposal in June 2025 along with 13 others.
One rule can shape how AI advisers register: the internet adviser exemption, which lets a firm that advises only through a website or app register with the SEC. It is covered in How to check whether an AI financial advisor is registered.
What rules apply to an AI financial advisor?
A registered investment adviser that uses AI is generally subject to the same core obligations as any other adviser.
| Rule | What it generally requires | Why it matters for AI advice |
| Fiduciary duty | A duty of care and loyalty to advisory clients, as described in the SEC’s 2019 interpretation of the adviser standard of conduct | Applies whether a person or a model produces the recommendation |
| Disclosure (Form ADV, Form CRS) | Public disclosure of services, fees, conflicts and disciplinary history | Where an AI adviser has to describe how its advice is generated and what it costs |
| Marketing Rule | No untrue or unsubstantiated claims in advertising | Covers what a firm says about its AI’s capabilities |
| Compliance program rule | Written policies and procedures, reviewed at least annually, and a chief compliance officer | Where testing and monitoring of an AI system sit |
| Examinations | Review by SEC or state examiners, which may occur at any time | Gives regulators access to the firm’s records and systems |
For what the fiduciary duty requires in practice and whom it is owed to, see What is a fiduciary, and can AI be one?
How do regulators police AI claims?
Mainly through enforcement and examinations under existing rules, rather than through new ones.
In March 2024 the SEC settled charges against two investment advisers for false and misleading statements about their use of AI — a practice SEC officials called “AI washing.” One had claimed to be the “first regulated AI financial advisor”; the other said it used AI and machine learning on client data in ways it did not. Both orders rested on the Advisers Act and the Marketing Rule rather than on any AI-specific law.
The SEC’s Division of Examinations also publishes annual priorities, and recent ones have included automated investment tools and whether firms describe their AI capabilities accurately.
Is advice from ChatGPT regulated?
General-purpose AI chatbots are generally not registered as investment advisers, and many say their output is information rather than financial advice. The rules that bind registered advisers — the fiduciary duty, the disclosure requirements, the examinations — don’t govern them in the same way.
That doesn’t make a chatbot’s answer wrong, and it doesn’t make a registered adviser’s answer right. It changes who is accountable when the answer is wrong. For how to tell the two kinds of tool apart, see AI financial advisor vs general AI assistants.
The M1 bottom line
M1 Advisor is offered by M1 Advisory Services LLC, an investment adviser registered with the SEC under the internet adviser exemption, so the Advisers Act’s obligations — disclosure, the Marketing Rule, a compliance program and SEC examination — apply to the firm. Registration does not imply a certain level of skill or training, or an endorsement by the SEC.
M1 Advisory Services LLC acts as a fiduciary to its advisory clients, and its advisory services cover securities held on the M1 platform. M1 Advisor provides investment advice and generates investment recommendations, but it doesn’t place trades — acting on a recommendation is up to you.
Check the registration yourself on adviserinfo.sec.gov.
Frequently asked questions
Yes, when they are registered with it; smaller advisers may register with their state instead. A robo-advisor registered with the SEC is subject to the Advisers Act like any other registered adviser, and the SEC’s 2017 robo-adviser guidance addresses how. The comparison with AI advisors is in AI financial advisor vs robo-advisor.
No. Regulation sets obligations a firm can be held to — disclosure, conduct, oversight — but it doesn’t certify that any given answer is correct. AI systems can produce confident answers that are wrong, so it’s worth verifying anything material before acting on it.
The SEC takes complaints and tips through its online portal, and FINRA handles complaints about broker-dealers through its investor complaint center. State securities regulators, listed by NASAA, oversee state-registered advisers.
This content is for informational and educational purposes only and does not constitute investment, tax or legal advice, and it is not a recommendation of any particular service, provider or strategy. Descriptions of laws, rules and regulatory guidance are general summaries current as of publication; what applies depends on the firm, its activities and the jurisdiction, and rules may change. Registered investment advisers owe fiduciary duties to their advisory clients; broker-dealers are subject to Regulation Best Interest with respect to recommendations. Investment advisory services are offered by M1 Advisory Services LLC, an SEC-registered investment adviser. Registration does not imply a certain level of skill or training, or an endorsement by the SEC.
Brokerage products and services are offered by M1 Finance LLC, member FINRA/SIPC; a self-directed brokerage account is not by itself an advisory relationship. M1 Advisor is included at no additional cost through December 31, 2027. Use of the M1 platform is subject to a $3 monthly platform fee, waived in any billing cycle in which total M1 assets reach $10,000 on at least one day; other fees may apply. See the M1 Fee Schedule and the Platform Fee Disclosure. Investing involves risk, including the possible loss of principal.
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