Use of Digital Engagement Practices by Financial Market Participants

Financial market participants increasingly rely on technological tools such as predictive data analytics, artificial intelligence (AI)/machine learning (ML), differential marketing and game-like features to provide financial services to customers. These tools, also referred to as Digital Engagement Practices (DEPs), are common features used by financial market participants, including robo advisers, wealth management firms and digital brokerages, as well as Insurtech firms.

While these features can increase access, provide educational resources, and enhance choice for investors, DEPs also raise potential investor protection concerns. Regulators are seeking to identify whether DEPs encourage investors to trade more often, invest in different products or even change an entire investment strategy without sufficient awareness of the risks. Moreover, DEPs may create potential conflicts between the financial services company and consumers when DEPs incorporate optimization functions which in some cases benefit investors but could also increase revenues for the company.

During this session hosted by Practising Law Institute, panelists Steffen Hemmerich and Tram Nguyen of Mayer Brown and Bryan Weaver of Fidelity Investments will discuss:

• Current market practices, tools and methods used to develop and implement DEPs (including the role of AI/ML)
• Regulatory challenges and enforcement actions
• Ethical and public policy considerations

For more information, please visit the event website.