How to balance marketing and compliance

Consider the Advertising Rule when engaging with various forms of media

Dec 1, 2017 @ 10:29 am

By Evan Zall and Lauren Caplan

As InvestmentNews noted in its Sept. 14 article, the Securities and Exchange Commission issued a risk alert based on the results of a 2016 exam (The Touting Initiative) that focused on common marketing and compliance missteps.

The findings prompt the question: In an increasingly competitive and transparent marketplace, how can advisers effectively – and legally – balance the need to differentiate their firms with the rigors of compliance?

It begins with understanding that both marketing and compliance are critical to the health of the investment landscape. The Advertising Rule may sometimes create a narrow selection of marketing options, but it doesn't prohibit advisers from conveying their expertise and building their brands in a way that promotes growth and longevity.

Here are three elements central to most marketing programs and compliance approaches that will address the Advertising Rule.


Even in a word-of-mouth business, advisers benefit from having materials on hand that capture their unique value to clients. One-page fact sheets about the firm or specific service lines (e.g. financial planning, or exit strategies for business owners) help convey a refined message through a professional look and feel.

They also, however, serve as a tempting spot to highlight an adviser's performance and accolades, which can be difficult areas to navigate. The Advertising Rule is explicit in its restrictions, and the SEC is particularly concerned about how advisers present past investment performance.

Well-crafted disclosures that accurately net out advisory fees, avoid cherry-picking recommendations and include detailed explanations about how performance was calculated can help comply with the Advertising Rule and applicable guidelines.

Focus on the DNA of the firm, not the performance. Marketing materials are most effective when they convey what makes an adviser unique.


One of the most effective pieces of marketing material often originates outside the firm. When a respected publication features an adviser or firm in its coverage, third-party credibility can help turn a skeptical prospect into an enthusiastic client.

Whether sharing third-party rankings, awards or an article that mentions the adviser, the SEC cares whether advisers are using such material in misleading ways. To be safe, advisers should treat such publications as advertising and ensure that they are accurate and independent of the adviser.

Before distributing third-party materials, pay attention to how the article discusses the adviser's performance and any potential testimonials. If it complies with the Advertising Rule, and the adviser includes appropriate disclosures on reprints of articles, third-party publications can be an important part of an adviser's marketing program.


The next generation of investors is comprised of digital natives raised on social media. To effectively market to this segment, advisers must find a comfort zone in amplifying their online presence through platforms like LinkedIn, Twitter and whatever comes next.

Social media is no more restricted than any other form of marketing. Generally, the Advertising Rule's requirements apply online just as they do to printed materials. Advisers who implement the appropriate usage and recordkeeping controls will be well-served by this powerful marketing tool.

Online testimonials usually are prohibited and advisers are not permitted to have reviews on their own website or social media page. This, for example, includes users tagging the "like" button on the page of an adviser or adviser's employee.

However, under certain circumstances an adviser may publish public comments that were posted to an independent social media site, as long as the third-party site and the posted commentary is truly independent from the adviser, and all of the unedited comments from that third-party site are published.

These restrictions in no way prohibit advisers from sharing insights that showcase their expertise or news about the firm on social media sites. They can also engage with others over social media, as long as they steer clear of providing recommendations or investment advice, with those two activities defined as broadly as possible.

Marketing and compliance should operate with a healthy respect for the value of each discipline. The SEC lays out restrictions for good reason, and advisers who respect the guidelines can safely market their firms to support their path to growth.

Evan Zall is president of Longview Strategies. Lauren Caplan is senior counsel at Klavens Law Group.


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