October 2021 Issue: Navigating the SEC's new Client Testimonial Rule-Navigating the SEC's new Client Testimonial Rule by Brian Thompson

Navigating the SEC's new Client Testimonial Rule by Brian Thompson

Pdf Summary

The SEC has approved a new marketing rule that allows financial advisors to use client testimonials for the first time ever. This change is significant as the industry has traditionally relied on referrals and word of mouth for growth. While some advisors have taken advantage of the new rule by showcasing client testimonials on their websites and social media platforms, others have chosen not to utilize this opportunity. Some advisors believe that their clients' referrals have been effective enough in marketing their services, while others are unable to implement the rule due to state regulations. Compliance with the new rule involves updating firm policies, adding disclaimer and disclosure language to marketing materials, maintaining compliance with anti-fraud provisions, and refraining from paying for testimonials. Advisors are advised to thoroughly review their current marketing and advertising compliance processes before introducing testimonials. Overall, the new rule is seen as a positive development for advisors who wish to leverage client testimonials to build trust and attract new clients. However, it is important for advisors to be mindful of compliance requirements and to seek guidance from their state regulatory agencies before implementing testimonials.

Keywords

SEC

marketing rule

financial advisors

client testimonials

referrals

compliance

state regulations

building trust

attracting new clients

advertising compliance processes