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This Is Advisors’ No. 1 Compliance Concern – And What They’re Doing to Manage It


For the second consecutive year, investment advisor compliance professionals ranked marketing and advertising as their No. 1 compliance worry. Driving this ongoing angst is a new Securities and Exchange Commission (SEC) marketing rule, which updates advisor marketing practices, and must be followed by Nov. 4, 2022. Here’s what advisors should know about trending compliance concerns and the SEC marketing rule.

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What’s Worrying Financial Advisors?

Compliance professionals are eyeing cybersecurity and ESG as other compliance concerns.

A whopping 78% of respondents in a survey of investment advisor compliance professionals view advertising and marketing as one of the “hottest” compliance topics for 2022. That’s up 20 percentage points from last year, according to the “2022 Investment Management Compliance Testing Survey.”

Cybersecurity took second place, with 67% of respondents viewing it as a hot topic. (The percentages do not total 100%.) Environmental, social and governance (ESG) factors, and climate change, took third place on compliance officers’ list of hot topics.

The report is a joint project of the Investment Adviser Association, ACA Group and Yuter Compliance Consulting.

The firms surveyed compliance professionals at 425 investment advisor firms. Services provided by responding firms included working with retail clients, pension consultants and high-net-worth individuals.

What’s the New SEC Marketing Rule?

In late 2020, the SEC finalized new amendments under the Investment Advisers Act of 1940 updating the rules regarding advisor marketing.

Previous regulations on advertising and marketing predated the digital age, and many advisors hope these new rules will allow them to bring marketing communications into the 21st century.

Notably, the SEC marketing rule will make these changes:

  • Allow for testimonials and reviews in advisor marketing materials, provided specific rules are followed.
  • Permit third-party ratings in advertising materials, also subject to certain rules.
  • Provide an additional framework for the reporting of investment performance.

The compliance date is set for Nov. 4, 2022.

How Advisors Are Preparing for the SEC Marketing Rule

Investment advisors are anticipating the new SEC marketing rule taking effect in November.

In general, advisors and compliance professionals have anticipated the SEC marketing rule as a major change, requiring significant focus and attention. Advisor firms may consider working with compliance specialists or attorneys to bring their advertising practices up to date.

According to the survey, compliance professionals are revising or planning to revise a range of procedures and processes in anticipation of complying with this rule. Those include revisions to:

  • The process for reviewing marketing materials (61.72%)
  • Training such as frequency and topics (56.55%)
  • Testing and annual reviews (41.03%)
  • Record-keeping (40.34%)
  • Performance-related record-keeping (40%)

The majority of respondents planned to comply with the new rule on or shortly before the Nov. 4 date, the survey says. Additionally, 92% said they did not anticipate using more social media in light of the new rule.

Tips for Growing Your Financial Advisory Business

  • Let us be your organic growth partner. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.

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