Marketing rule compliance just got a little clearer for investment advisers. The SEC staff released updated guidance that sheds new light on testimonials and performance advertising.
Many RIAs have struggled with the marketing rule since it took effect. You want to showcase client success stories and track records. But you also worry about crossing regulatory lines that could mislead investors.
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What Changed With Testimonial Rules
The biggest shift involves testimonials from people with disciplinary histories. Previously, most advisers avoided paying anyone who had SRO disciplinary orders. They feared automatic disqualification.
The SEC staff now takes a more nuanced view. You can compensate someone with a disciplinary history under certain conditions. The person cannot be barred or suspended. They must comply fully with their order terms. You must clearly disclose the disciplinary history for a specific period.
This approach prioritizes transparency over blanket prohibitions. When investors know the full context, they can make better decisions about credibility.
Performance Advertising Gets More Flexible
The second major clarification involves performance presentations. Many advisers wondered if they always needed to substitute modeled fees for actual historical results. This created confusion when marketing to investors who might pay different fees.
The new guidance steps away from rigid requirements. Instead, it emphasizes the rule's general anti-fraud principles. You can use actual performance data when disclosures clearly explain fee differences and their impact.
This flexibility comes with responsibility. You must ensure investors understand what the results truly represent.
The Bigger Picture
These updates reflect the SEC's broader regulatory philosophy. The agency wants thoughtful judgment, not mechanical compliance. You need to move beyond checkbox approaches toward principles-based thinking.
The focus remains on clarity, fairness, and investor understanding. When you design marketing materials, ask yourself if investors will truly comprehend what you're presenting.
Staying compliant with evolving marketing rules requires ongoing attention and expertise. GiGCXOs helps investment advisers navigate these complex requirements while building effective marketing strategies.
Frequently Asked Questions
Can I use testimonials from clients who had past regulatory issues?
Yes, under specific conditions outlined in the new guidance. The person cannot be currently barred or suspended and must comply with their disciplinary order. You must also disclose their disciplinary history clearly in your advertisement.
Do I always need to show modeled performance instead of actual returns?
No, the SEC stepped away from this rigid requirement. You can use actual performance data when proper disclosures explain fee differences and their impact on returns. The key is ensuring investors aren't misled about what the results represent.
What's the most important compliance principle for marketing materials?
Focus on whether investors can truly understand your message with full context. The SEC emphasizes transparency and clear disclosure over blanket prohibitions. Your materials should help investors make informed decisions rather than confuse them.
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The content in this blog is for informational purposes only and does not constitute legal advice, regulatory guidance, or an offer to sell or solicit securities. GiGCXOs is not a law firm. Compliance program requirements vary based on business model, customer base, and regulatory classification.