Three major financial planning organizations are urging state securities regulators to prioritize clarity and consistency as the North American Securities Administrators Association considers aligning state marketing rules for investment advisers with federal standards.
In a joint letter submitted August 28, the Certified Financial Planner Board of Standards, the Financial Planning Association, and the National Association of Personal Financial Advisors expressed support for NASAA’s proposal to update its model rules for investment adviser advertising. The groups said the move would help “simplify and harmonize compliance requirements for investment advisers, ease regulatory burdens, create business opportunities, and minimize confusion for firms and investors.”
NASAA’s proposed amendments, announced in late July, would bring state rules closer to the Securities and Exchange Commission’s Marketing Rule, which was modernized in 2020 and took effect in 2021. The changes would allow state-registered advisers to use testimonials, endorsements, third-party ratings, and performance reports in their marketing, provided certain regulatory standards are met.
Many states have already moved to align their rules with the SEC with respect to online reviews, but the letter’s authors argue that a uniform approach is needed nationwide, especially as marketing opportunities have broadened out into digital channels such as social media and short-form videos.
In the joint letter, the organizations backed NASAA’s proposal to incorporate the SEC’s language directly into state rules, rather than simply referencing the federal regulation.
“We believe the need for clarity for firms and investors, with accessible and clear language in individual state regulations, outweighs the benefits of shorter or more streamlined written requirements that simply reference the SEC Marketing Rule,” the letter states.
While the groups acknowledge concerns about the risk of misinformation in testimonials and endorsements, they point to the SEC’s principles-based framework as providing “guardrails that allow them under appropriate conditions.” They also emphasize the importance of ongoing enforcement against misleading marketing practices.
The letter also highlights practical considerations for advisers, noting that technology companies have developed tools to help firms comply with the SEC’s standards. Aligning state and federal rules, the groups argue, would allow smaller, state-registered advisers to access these solutions, reducing costs and improving efficiency.
A potential shift in the regulatory landscape is also on the horizon. The SEC is currently contemplating whether to raise the minimum assets under management required for federal registration, currently set at $100 million. If that threshold is increased, more firms could fall under state oversight.
“Firms currently registered with the SEC, and subject to the SEC Marketing Rule, may find themselves subject to state regulation in the future,” the letter notes.
The organizations also urge NASAA to encourage states to adopt SEC guidance on the Marketing Rule, particularly as some provisions including those around performance data remain ambiguous in certain cases.
“To promote consistency in interpretation and compliance with the SEC Marketing Rule standards, NASAA should encourage states to incorporate such SEC guidance into their administrative interpretations,” the letter says.
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