Top 12 Regulatory Deficiencies for RIAs — #6 Advertising

What You Need to Know

Advertising for RIAs is obviously a highly-regulated activity, so it makes sense that it ranks among the most common compliance deficiency for advisors.

When regulating advisor advertising, regulators focus first on disclosures, rather than methodology. While offering little guidance on how to do certain things, they do heavily regulate the disclosures displayed on advertisements. Certain advertisements may be “compliant” per se, however, the omission of proper disclaimers results in a false or misleading message.

Beyond disclosures, regulators tend to focus on certain areas of advertising, including:

Testimonials

Social Media

Past Specific Recommendations

Recordkeeping/Approval Process

Performance-based Advertising

For a complete overview of the "Advertising Rule" for RIAs, click here .

Why You Should Care

The ability to confidently and efficiently advertise your services can be of great benefit in growing your firm. With that said, inaccurate or misleading public-facing content can destroy a firm’s reputation quickly.

Unlike brokers overseen by FINRA, the SEC and state regulators are not responsible for reviewing or approving an RIA’s advertisements prior to use. The responsibility is placed on your firm and your CCO to ensure that all advertisements are compliant with regulations.

With social media becoming an increasingly important advertising channel, it is important to treat this activity with the same care as you would traditional mediums. Because of it’s ease of use, however maintaining control and oversight of social media activity brings a unique set of challenges.

We cover social media compliance in more detail in a previous post .

Our Recommendations

To ensure that your firm is keeping up with regulatory requirements and industry best practices in this area:

Ensure you have a review process in place to analyze firm advertisements for compliance.

Check your advertisements for proper disclosures.

Coordinate a process with your IARs to review new advertisements and obtain copies for Books and Records requirements.

Review seminar presentation content for appropriate regulatory disclosures and compliance.

Perform checks on your performance calculations to validate accuracy before use.

Understand your firm's social media presence and ensure you and your employees are not directly or indirectly interacting with the public in a way that runs afoul with the Advertising Rule.