Statement on SEC Proposed Rule: “Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers”
On October 10, 2023, CFP Board submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) concerning its Proposed Rule: “Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers,” issued earlier in the year by the SEC. In its letter, CFP Board noted that the components of the proposed rulemaking that may apply to CFP® professionals are consistent with the commitment CFP® professionals have made to CFP Board as set forth in the Code of Ethics and Standards of Conduct. CFP Board also observed that if a firm selects technology for the professional to use, and that technology places the firm’s own interests above the client’s, then the technology would present an obstacle to a CFP® professional who seeks to act in the client’s best interests. In addition, CFP Board expressed its concern about technology being able to do indirectly what may not be done directly (i.e., a technology-enabled client interaction might place the firm’s or the professional’s interests above the client’s, when that would not be permissible if the communication was a recommendation made by the broker or adviser). CFP Board’s comment letter also recognized that many CFP® professionals rely on third-party technology. Therefore, CFP Board suggested that the final rule preserve a firm’s ability to rely on third-party technology while reinforcing that a firm’s reliance on third parties does not relieve them of their obligations. Finally, CFP Board encouraged the SEC to consider alternatives that could reduce burdens and lower the risk of curbing appropriate technological advancements while still achieving the rule’s objective of ensuring that technological advances are in the public's best interests.