Does Your AI Trading Agent Need to Register as an Investment Adviser?

If your AI agent gives personalized advice about securities to other people for compensation, it is likely acting as an investment adviser — and the firm behind it must register. The Investment Advisers Act of 1940 asks what the advice is, not who or what delivers it, so an autonomous agent is measured by the same test as a human adviser. An AI that only broadcasts impersonal, general market commentary may instead fall within the publisher exclusion. Either way, autonomy is not an exemption — and because an AI cannot itself be a registrant or a fiduciary, the obligations land on the people who build and deploy it.

AI agents that pick securities, time trades, and manage portfolios are arriving in consumer finance faster than any AI-specific rulebook. But the threshold question is not new and does not depend on the technology. Investment-adviser law asks what a business does — whether it advises others about securities for pay — not whether a human or a model produced the recommendation. This guide walks the analysis a founder should run before launch: the three-part definition, the publisher line that separates a newsletter from an adviser, where you register, the fiduciary duty an AI cannot hold, and the AI-washing enforcement risk that attaches even after you register.

One scope note first. This guide addresses investment-adviser status; a separate regime can stack on top of it. An agent that itself executes transactions in securities for others may independently need to register as a broker-dealer under the Securities Exchange Act (§ 15(a); see the § 3(a)(4) definition of “broker”), and an agent that holds or moves client assets can trigger the Advisers Act custody rule (Rule 206(4)-2). Those questions are not answered by the adviser analysis below — they run alongside it.¹

Key takeaways

• Automation is not an exemption. The Advisers Act reaches any person in the business of advising others about securities for compensation; putting software or an autonomous agent between the firm and the client does not remove the firm from that business.
• Personalization is the dividing line. An impersonal, general-circulation publication can fall within the publisher exclusion; a tool that tailors recommendations to a specific client looks like an adviser.
• The registrant and fiduciary is the firm, not the AI. An AI cannot register or owe a fiduciary duty; the deploying entity takes on both and cannot delegate them to the model.
• Registration splits by size. Roughly $100 million in AUM is the line between state and SEC registration, with a $90–$110 million buffer band.
• There is no AI-specific adviser rule right now. The SEC’s 2023 predictive-data-analytics proposal was withdrawn in 2025; the existing framework governs, and marketing your AI inaccurately is its own violation.

The AI-adviser questions at a glance

The questions that decide the analysis, the law behind each, and the usual answer:

Start here: are you giving personalized advice about securities for compensation?

Everything begins with the statutory definition. The Advisers Act defines an “investment adviser” as “any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities” (15 U.S.C. § 80b-2(a)(11)).² That yields a three-part test: (1) advice about securities, (2) for compensation, and (3) as part of a business. An AI agent that selects securities, times entries and exits, or allocates a client’s portfolio is giving advice about securities; if it does so for a fee, as a business, the first two elements are met too.

The element that resolves the AI question is the first one — being in the business. The Act reaches any “person who, for compensation, engages in the business of advising others,” and inserting software or an autonomous agent between the firm and its clients does not remove the firm from that business. That is why automation creates no exemption. (Read “compensation” broadly: the SEC treats it as any economic benefit, and it need not come from the client.) SEC staff have taken the same view of automated advisers, issuing guidance on how “robo-advisers” meet the Advisers Act’s substantive and fiduciary obligations and presuming they are registered investment advisers.³ A model that recommends securities to clients for a fee is doing the very thing the Act regulates — whoever, or whatever, generates the recommendation.

The practical takeaway: do not treat “it’s just an algorithm” as a defense. If the output is investment advice about securities delivered to clients for compensation, the automation does not change the answer — it only changes who has to build the compliance program.

The publisher line: when your AI is a newsletter, not an adviser

Not every AI that talks about markets is an adviser. The Act excludes “the publisher of any bona fide newspaper, news magazine or business or financial publication of general and regular circulation” (§ 202(a)(11)(D)), and in Lowe v. SEC, 472 U.S. 181 (1985), the Supreme Court held that impersonal publications fall within that exclusion.⁴ The Court drew the line at personalization:

The mere fact that a publication contains advice and comment about specific securities does not give it the personalized character that identifies a professional investment adviser.

As long as communications with subscribers “remain entirely impersonal and do not develop into the kind of fiduciary, person-to-person relationships” that characterize an adviser, the Court held, the publications are presumptively within the exclusion.⁴ For an AI product, that is the crux. An agent that broadcasts the same general, non-tailored market commentary to everyone looks like a publisher. An agent that ingests a specific client’s holdings, risk tolerance, and goals and returns recommendations attuned to that person looks like an adviser. The more personalized the output, the more likely registration is required — and a “general information, not advice” label will not save a tool that is, in substance, giving individualized recommendations.

Where you register: state or SEC

If your agent is an adviser, the next question is where it registers, and that turns on regulatory assets under management. A “mid-sized” adviser — roughly $25 million to $100 million — generally registers with its home state; an adviser is permitted to register with the SEC once it reaches $100 million and is required to at $110 million, and once SEC-registered it need not withdraw until AUM falls below $90 million (§ 203A; Rule 203A-1).⁵ One mid-sized exception matters for a fast-scaling startup: an adviser that would otherwise have to register in 15 or more states may register with the SEC instead. Below $25 million, SEC registration is generally unavailable and state registration governs unless an exemption applies.

A carve-out runs the other way for software-delivered advisers, and it is the most relevant one here: the internet investment adviser exemption can permit SEC registration regardless of AUM where an adviser provides advice to its clients exclusively through an operational, interactive website — a natural fit for an app-based AI adviser. The SEC narrowed that rule in 2024 (requiring an operational interactive website at all times and eliminating the prior allowance for a limited number of non-internet clients), with a March 31, 2025 compliance date, so build to the current, tighter version.⁶

For an AI-adviser startup, the practical point is to plan the registration path against your AUM trajectory early, and to remember that registration is the beginning of the obligation, not the end — it opens the door to the Advisers Act’s substantive duties, examinations, and recordkeeping. The related compliance point that trips AI advisers: the marketing rule requires you to be able to substantiate factual and performance claims (Rule 206(4)-1), and the books-and-records rule requires you to retain the supporting records (Rule 204-2).⁷

The fiduciary an AI cannot be

Registration brings the defining obligation of adviser status: the fiduciary duty. The SEC’s 2019 interpretation makes clear that “an investment adviser’s fiduciary duty under the Advisers Act comprises a duty of care and a duty of loyalty,” and that the duty “may not be waived,” though it applies in a manner that reflects the agreed scope of the relationship (Release IA-5248).⁸ It is enforced through the Act’s antifraud provisions and runs to the entire adviser-client relationship.

Here the AI question has a clean answer under current law that founders often miss: an AI system is not a “person” under the Act and cannot register, hold, or discharge a fiduciary duty. The duty of care and loyalty falls on the registered firm and the humans running it, and it cannot be delegated to the model. That has design consequences — the firm must be able to supervise the agent, understand and explain the basis of its recommendations, manage conflicts the model might introduce, and stand behind the advice as its own. “The algorithm decided” is not a defense to a breach of a duty the firm, not the algorithm, owes.

Marketing your AI is its own liability: AI-washing

A separate risk attaches even after you register correctly. In March 2024 the SEC settled its first “AI-washing” enforcement actions against two investment advisers — Delphia and Global Predictions — for false or misleading statements about how they used artificial intelligence, charged under the Advisers Act’s antifraud and marketing provisions (§ 206; Rule 206(4)-1).⁷ The cases were about marketing and disclosure, not registration status: the advisers were penalized for overstating and failing to substantiate their AI capabilities.

The lesson for any AI-adviser is to say only what you can prove. Describe the actual role the model plays in forming advice, disclose it in your Form ADV where material, and keep the records to back up both your AI claims and the basis of your recommendations. Overstating the technology — “fully AI-driven,” “first regulated AI advisor,” and similar — is a fraud-and-marketing problem independent of whether you registered in the first place.

No AI-specific rule is coming right now

Founders sometimes wait for a dedicated AI rule before building a compliance program. Do not. The SEC proposed a rule in 2023 that would have addressed conflicts of interest from advisers’ use of predictive data analytics and AI (Release No. 34-97990), but the Commission withdrew that proposal in June 2025.⁹ There is no AI-specific adviser rule in force, and any future rule would begin as a fresh proposal. What governs today is the existing framework — the definition, the fiduciary duty, the antifraud and marketing rules, and the recordkeeping requirements — applied to AI exactly as it is applied to any other adviser. Building to that framework now is the correct posture; waiting for a rule that has already been withdrawn is not.

What to do first

In order: (1) characterize your output honestly — is it personalized advice about securities for compensation, or genuinely impersonal publication; (2) if it is advice, map your registration path (state vs. SEC) against your AUM; (3) design for the fiduciary duty the firm — not the model — will owe, including supervision and explainability; (4) say only what you can substantiate about your AI, and keep the records to prove it; and (5) build to the existing framework rather than waiting for an AI-specific rule. Each of these is a question to resolve with counsel before you put the agent in front of clients, not after.

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This article provides general information only and is not legal advice. Investment-adviser status, registration, fiduciary, and marketing requirements are fact-specific and evolving, and their application to autonomous AI agents is an emerging area. Whether and how any requirement applies to a particular business is a determination to make with qualified counsel. No attorney-client relationship is formed by this article. Attorney Advertising.

Work with Astraea Counsel

Astraea Counsel advises fintech, crypto, and AI companies on investment-adviser and securities regulation, registration strategy, and the questions raised by autonomous AI agents. Explore our Regulatory Compliance services or contact us to discuss your product.

Related resources

• Does Your Agentic-Payments Startup Need a Money Transmitter License? — the money-transmission twin of this analysis
• The SEC/CFTC Token Taxonomy: Five Categories — how digital assets are classified as securities
• AI Agent Deployer Liability — who answers for an autonomous agent’s conduct

Notes

For a registration analysis on your own product, see our AI agent licensing lawyer page.

Footnotes

1. Securities Exchange Act of 1934 § 15(a), 15 U.S.C. § 78o(a) (broker-dealer registration); § 3(a)(4), 15 U.S.C. § 78c(a)(4) (definition of “broker”); 17 CFR 275.206(4)-2 (Advisers Act custody rule). ↩

2. Investment Advisers Act of 1940 § 202(a)(11), 15 U.S.C. § 80b-2(a)(11) (defining “investment adviser”; exclusions at subparagraphs (C) (broker-dealer, solely incidental) and (D) (bona fide publisher)). ↩

3. SEC Division of Investment Management, IM Guidance Update No. 2017-02, “Robo-Advisers” (Feb. 2017) (applying the Advisers Act’s substantive and fiduciary obligations to automated investment advisers). ↩

4. Lowe v. SEC, 472 U.S. 181 (1985) (impersonal publications of general and regular circulation fall within the publisher exclusion; personalization distinguishes an adviser). ↩ ↩²

5. Investment Advisers Act § 203A, 15 U.S.C. § 80b-3a; 17 CFR 275.203A-1 (SEC-registration eligibility at $100 million in assets under management, with a $90–$110 million buffer band; $25 million statutory floor). ↩

6. 17 CFR 275.203A-2(e) (internet investment adviser exemption; amended 2024, with a March 31, 2025 compliance date). ↩

7. In re Delphia (USA) Inc. and In re Global Predictions, Inc. (SEC, Mar. 2024) (settled AI-washing actions under Advisers Act § 206 and Rule 206(4)-1); see also 17 CFR 275.206(4)-1 (marketing rule; substantiation of factual and performance claims) and 17 CFR 275.204-2 (books-and-records; retention of supporting records). ↩ ↩²

8. SEC, Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Release No. IA-5248 (June 2019) (fiduciary duty comprising a duty of care and a duty of loyalty; the duty may not be waived); see also 15 U.S.C. § 80b-2(a)(16) (defining “person,” which does not include a software system); SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963) (the adviser’s fiduciary obligation). ↩

9. SEC, Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker-Dealers and Investment Advisers, Release No. 34-97990 (proposed 2023; withdrawn June 2025). ↩