New rules to let state-registered investment advisors publish testimonials and online reviews from their clients have been proposed by the North American Securities Administrators Association (NASAA), over four years after the SEC Marketing Rule went into effect in May 2021.
NASAA’s proposed amendments are aimed to “more closely align them to the SEC’s current investment adviser advertising standards,” the association said in a Tuesday press release. Currently about 25 states do not allow state-registered RIAs to promote their client testimonials and online reviews, despite federally-registered advisors under the SEC being allowed to publish reviews and third-party endorsements since 2021.
States that currently prohibit advisors from promoting testimonials and online reviews include California, Connecticut, Alabama, Alaska, Arizona, Ohio, Illinois, Iowa, and Kansas, according to the advisor reviews website Wealthtender that tracks state-by-state regulatory stances.
“It’s beyond time for the regulators in California and elsewhere to follow in the footsteps of the 25 states that have modernized their rules that will ultimately benefit millions of Americans as they prepare to hire financial advisors,” Wealthtender CEO Brian Thorp told InvestmentNews.
“Yesterday's news release from NASAA proposing alignment with the SEC Marketing Rule finally provides a light at the end of the tunnel for the thousands of state-registered advisors to let their clients' voices be heard that can help residents in these states make more informed hiring decisions,” Thorp said.
The SEC’s current rule discourages advisors from selectively curating which reviews they publish. Per the SEC rule, if an advisor were to only publish select reviews, they must also include an accompanying disclosures link to a page where all reviews are published.
New York-based IAR Mitlin Financial, which joined the mega-RIA Carson Group in 2020, has been among the advisor teams to take advantage of the SEC’s updated marketing rule over the past few years. Google Reviews for the Long Island-based firm show a five-star rating with 37 reviews, while Mitlin Financial’s website has a page dedicated to client testimonials.
“We've been a benefactor of that [SEC] rule change,” Mitlin Financial founder Larry Sprung told InvestmentNews. “It's led to a lot of inquiries from families that have seen how highly rated we are, because I think we're starting to separate ourselves from other advisors that are not using these tools. If somebody searches for an advisor and sees two firms, all things in their mind equal and one has 20 or 30 Google reviews that are outstanding, versus a firm that has none, I think that that's an important factor in today's day and age.”
The 19-page amendments proposal from NASAA includes a request for public comments on its proposals to be made through August 28. In 2022, InvestmentNews reported that NASAA was working on marketing legislation that would “largely mirror the SEC rule.”
“The ability of federal-covered advisers to advertise in ways that state-registered advisers may not could put state-registered advisers at a competitive disadvantage,” reads this week’s new proposal from NASAA. “While some NASAA members continue to believe that some marketing activities conditionally permitted by the SEC Marketing Rule should remain prohibited, most members and the Project Group believe that consistency among state and federal securities laws is paramount.”
The bank's new training initiative aims to add hundreds of advisors as it expands its mass-affluent advice unit, according to Barron's.
The lawyers' group warns that adjudicating certain claims externally and limiting punitive damages, among other suggestions, could hurt investors.
With Parkworth Wealth Management and its Silicon Valley tech industry client base now onboard, Savant accelerates its vision of housing 10 to 12 specialty practices under its national RIA.
The wealth tech giant is unveiling its new offerings, designed for advisor productivity and client engagement, as investors and experts continue to grapple with the implications of AI.
Meanwhile, Merchant is continuing to expand its support for RIAs by partnering with a South Dakota-chartered trust company.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
