SEC Looking to Modernize Ad Rules for Advisors

Advertising for financial advisors might soon enter the 21st century. The Securities and Exchange Commission voted in early November to propose amendments to rules that have long constrained advisors’ ability to advertise their services. If the amendments pass, they will be the first updates to the Investment Advisers Act since 1979.

According to the 507-page document filed by the SEC on November 4, the “proposed amendments to the solicitation rule updates its coverage to reflect regulatory changes and the evolution of industry practices since we adopted the rule in 1979. The Commission is also proposing amendments to Form ADV that are designed to provide the Commission with additional information regarding advisers’ advertising practices. Finally, the Commission is proposing amendments under the Advisers Act to the books and records rule, to correspond to the proposed changes to the advertising and solicitation rules.”

In a nutshell, the SEC’s Advertising Rule will finally be tailored to fit in the modern, digital landscape. Among the most notable changes to the rule will see “advertisement” redefined to include communications “disseminated by any means,” and will “recognize developments in technology, changing profiles of investment advisers registered with the Commission, and our experience administering the current rule.”

The expanded definition will include emails, text messages, instant messages, electronic presentations, videos, films, podcasts, digital audio or video files, blogs, billboards, social media, newspapers, magazines, and direct mail.

The newly proposed definition of “advertisement” will not include:

  • Live oral communications that are not broadcast on radio, TV, the internet or similar medium
  • Communication that does no more than respond to an unsolicited request for information about the advisor or their services (this provision gives exception for communication to a “retail person” that includes performance results or any message that includes hypothetical performance).
  • Ads, sales material or literature about an investment company registered under the Investment Company Act of 1940.
  • Information that requires statutory or regulatory filings.

Other changes would allow advisors to solicit clients with testimonials, endorsements, and 3rd party ratings. According to the documents, the SEC is “We are proposing to expand the rule to cover solicitation arrangements involving all forms of compensation, rather than only cash compensation, eliminate requirements duplicative of other rules, and tailor the required disclosures solicitors would provide to investors. The proposed rule would also refine the existing provisions regarding disciplinary events that would disqualify a person or entity from acting as a solicitor.”

The SEC is taking public comment on the proposed amendments through January 3. Read the full press release about the proposal, including comments from SEC Chairman Jay Clayton here.


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Legacy Financial Partners - Legacy Financial Partners is an independent and full service Life Insurance and Annuity FMO that provides specific marketing solutions to help their clients succeed. Using dynamic tactics, an extensive support network and progressive marketing options, Legacy Financial Partners provides unique and specific development strategies to their business partners.

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