Why proposed until approved is the rule that makes AI supervisable
An advisory firm supervises people by making them accountable for what they send and record. An AI system cannot be accountable, so the firm needs a rule that assigns accountability for its output to a person before the output has effect. Proposed until approved is that rule. It does two things a policy alone cannot. First, it creates an event, the approval, that can be recorded with who, when, and what changed, which is the evidence an examiner or a successor needs. Second, it prevents the failure mode where a fluent draft is treated as finished because it reads well. For a compliance officer, the rule is what makes "AI-assisted" a supervisable category rather than an unsupervised one. For a small firm, it is a habit: read it, decide, and leave a one-line trace of the decision.
What proposed until approved is not
Proposed until approved is not "human in the loop," a phrase that describes a person being somewhere in a process without saying what they decide or whether the decision is recorded. It is not a risk-tiered approval, where only outputs a vendor classifies as high-risk are held; every proposal is held. It is not a disclaimer that AI was used; a disclaimer describes the past, the rule governs what may happen next. And it is not a delay: approval can take seconds. What makes it the rule is that the approval exists as a recorded event, not that it is slow.
Where proposed until approved touches regulation
The rule is a design response to obligations that predate it. Rule 206(4)-7 (17 CFR 275.206(4)-7) requires an SEC-registered adviser to adopt written policies reasonably designed to prevent violations and to review them annually; a supervision policy that cannot show a person approved AI-drafted client communications is hard to describe as reasonably designed. Rule 204-2(a)(7) requires records of written communications relating to advice; when a communication was drafted by a system and approved by a person, the approval is part of how the record came to exist. The Marketing Rule (17 CFR 275.206(4)-1) requires a reasonable basis for material statements in advertisements; approval by a person with the evidence in front of them is how that basis is established. None of these rules names AI. All of them assume a person decided. Regulatory descriptions are U.S. federal and current as of September 2026.
How the term is used on this site
Proposed until approved is the third of the Governed Intelligence Principles: "AI output remains proposed until approved. Intelligence may inspect, interpret, and propose. Accountable authority remains explicit." Advisor Insights applies the same discipline to the client's AI as to the firm's: when a client arrives with an AI-generated conclusion, the advisor's review of it is proposed until approved from the other direction.
Related terms
Articles that use this term
- The Plugin Is a First Draft. The Firm Is the Author.
- Your AI Approved Nothing. You Did. Where Is That Written Down?
- Which AI-Generated Work Product Is a Required Record Under Rule 204-2?
- The Transcript Remembers Everything and Weighs Nothing
- When a Client Arrives With Questions From AI
- The Engineer Signs the Drawings. Who Signs the Advice?
- A Policy Without a Record Is a Promise Without Receipts
- When the Firm Arrives With a Product
- When a client arrives with an answer from AI
Questions
Is proposed until approved the same as human in the loop?
No. "Human in the loop" says a person is somewhere in a process without saying what they decide or whether the decision is recorded. Proposed until approved names the decision, assigns it to an accountable professional, and requires that the approval exist as a recorded event.
Does proposed until approved apply only to high-risk outputs?
No. Every proposal is held until approved. A risk-tiered approval, where only outputs a vendor classifies as high-risk are held, is a different and weaker rule.
Does the rule slow work down?
Approval can take seconds. What makes it the rule is that the approval exists as a recorded event with who, when, and what changed, not that it is slow.