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23 June 2022

Are You Prepared for the SEC’s New Marketing Rule?

With the once-in-a-generation change in the SEC’s Marketing Rule now available, most advisory firms answer the title question by stating “no.”


For the first time in more than 40 years, the SEC has updated its marketing rule to allow RIAs to use testimonials, endorsements, and third-party reviews in their marketing, advertising, and communication materials, creating a powerful new opportunity for advisors. But, according to recent research from Indyfin[1], more than 14,000 SEC RIAs filed an ADV amendment as of March 2022. However, the data shows that nearly 65% of those firms did not complete the ADV Section 5L, indicating that most firms are not taking advantage of the opportunities provided by the modernization of the SEC’s rule.


Of those that completed Section 5L in their Form ADV, only 2.3% indicated that they were using testimonials, and 2.1% were using endorsements. Additionally, only 9.2% of advisors use third-party ratings in their marketing materials, such as Google, Yelp, and the like. Although proven to help create trust and lead to new business opportunities, the lack of adoption means that most of the industry is not taking advantage of these modern digital tools.


While there previously was doubt and uncertainty about online reviews within the wealth management industry, the SEC's New Marketing Rule has now clarified those compliance issues, so firms can catch up with other industries that use online marketing. Modern consumers depend on online opinions and reviews to make decisions as they can gather information about firms in a pressure-free, anonymous environment without direct engagement. Similar to how platforms such as Uber and Airbnb have made individuals comfortable taking rides with strangers and staying in someone else's home without a thought, the availability of client feedback about an advisor can help build trust. Consumers can now search for, find, and read key information about how that advisor works, areas of specialty, and what existing clients say about them.


So, how can an advisory firm get started with the SEC’s new Marketing Rule?


The first step is gathering client feedback via an online survey regarding various performance aspects, such as, "does my advisor listen to me?" "How do they work with clients?" "What are their specialties?" "What services do they provide?" etc. Firms can then use final input in various marketing communications, newsletters, on their website, and within other outreach communications. Early feedback from advisors in this survey process has shown that they receive a high response rate from their clients. Of course, there are specifications under the new rule and appropriate disclosures to include, so be sure to check with your compliance consultants and attorneys for specific guidance.


Ultimately, there is a first-mover advantage for advisors to adopt and leverage these marketing approaches. However, there is urgency here. The November 2022 deadline to adopt the new rule is approaching quickly, so firms must start now to be prepared to change how they digitally market.


To learn about the many compliance and practice management tools available through the Black Diamond® Wealth Platform, request your personal demo, call 1-800-727-0605, or email