For most of the last sixty years, marketing an investment advisory firm meant working around a rule written in 1961. That changed on 4 November 2022, when the SEC's modernised Marketing Rule (Rule 206(4)-1 under the Investment Advisers Act) took full effect, folding the old advertising and cash-solicitation rules into a single framework. For registered investment advisers, it opened doors that had been shut for decades, testimonials and endorsements chief among them, and it attached real conditions to walking through them.
This guide covers what the rule actually requires, where the SEC has been enforcing it, and how to run marketing that uses the new freedom without inviting a deficiency letter. It is educational and not legal advice, so treat it as a map rather than a substitute for your compliance team or counsel.
A quick scope note. The Marketing Rule applies to SEC-registered investment advisers. If your firm is state-registered, generally because you manage under the SEC's threshold, you follow your state's advertising rules, though many states have aligned with the federal model, so the principles below still travel well.
What counts as an advertisement
The rule defines an advertisement in two prongs, and the second one is the surprise for most firms.
The first prong is the familiar one. Any direct or indirect communication you make to more than one person that offers your advisory services to prospective clients, or new services to existing ones. Live, unscripted oral communications are excluded, and so are most genuinely one-to-one communications, unless they include hypothetical performance.
The second prong is any testimonial or endorsement for which you provide compensation, directly or indirectly. That word "indirectly" matters. A free product, a reduced fee, a referral arrangement, or entry into a prize draw can all count as compensation, which pulls a lot of influencer and referral activity squarely into the rule.
The seven general prohibitions
Underneath everything sits a set of principles-based prohibitions that apply to every advertisement. In plain terms, you cannot include an untrue statement of material fact, or omit a fact that makes what you did say misleading. You cannot make a material claim you are unable to substantiate if the SEC asks. You cannot create a misleading implication about your firm, discuss potential benefits without a fair and balanced treatment of the risks and limitations, or reference specific advice in a way that is not fair and balanced. You cannot present performance in a way that is misleading. And there is a catch-all for anything that is otherwise materially misleading.
The theme is fair and balanced. The rule is less interested in banned words than in whether the overall impression is honest.
Testimonials and endorsements: the headline change
Client testimonials and third-party endorsements are allowed for the first time in decades, and they are the single biggest opportunity the rule created. They also come with the conditions the SEC has enforced hardest.
Every testimonial or endorsement needs clear and prominent disclosure, at least as prominent as the testimonial itself, of three things: whether the speaker is a client, whether they were compensated, and a brief statement of any material conflicts of interest. On top of that, you need oversight to ensure the promotion complies with the rule, a written agreement with the promoter once compensation crosses a de minimis threshold (currently more than 1,000 dollars over twelve months), and you cannot pay an "ineligible person," meaning someone subject to certain disqualifying regulatory events, to promote you.
The practical failure mode is a paid endorsement that reads as an independent recommendation. In September 2024 the SEC settled with nine advisers over exactly this territory, including testimonials that did not come from actual current clients and endorsements that failed to disclose the promoter was paid and was not a client. Disclosure is not the fine print here. It is the thing being examined.
Third-party ratings
Awards and rankings are useful social proof, and they are also a common deficiency. If you cite a third-party rating, you need a reasonable basis to believe the questionnaire or survey behind it was not designed to produce a predetermined result, and you must clearly disclose the date of the rating and the period it covers, the identity of the third party, and whether you paid anything, directly or indirectly, to participate or use it. "Named a top adviser" with no date, no source, and no note that you paid to enter is the version that draws a finding.
Performance advertising
Performance is where the technical detail bites, and where a run of 2024 enforcement landed.
The core rule is that you cannot show gross performance without also showing net performance, calculated over the same period and with equal prominence. For most advertisements, you also have to show performance across one, five, and ten-year periods, or since inception if the track record is shorter, so you cannot cherry-pick a flattering window.
Hypothetical performance, which includes model, backtested, and projected returns, carries the strictest conditions. You must adopt policies and procedures reasonably designed to ensure the hypothetical is relevant to the financial situation and objectives of the intended audience, give enough information for that audience to understand the criteria and assumptions behind it, and provide or offer information about its risks and limitations. Because you cannot tailor to a specific audience when anyone can see it, this effectively means hypothetical performance generally should not sit on a public website or a mass email. That is precisely what the SEC charged in April 2024, when five advisers settled over non-compliant hypothetical performance, and in a separate case involving hypothetical returns advertised to the general public alongside paid athlete endorsements.
Extracted performance, meaning the results of a subset of a portfolio, requires you to provide or offer the performance of the total portfolio, and predecessor performance carries its own conditions around similarity and continuity.
Substantiation is a standing requirement
The rule includes a trap that catches confident marketing language. You must have a reasonable basis to believe you can substantiate any material statement of fact, and the SEC can demand that evidence on examination. If you cannot produce it, the rule presumes you did not have a reasonable basis. The word that keeps appearing in enforcement is "conflict-free." Several firms advertised conflict-free advice and could not substantiate it. If your marketing makes a claim, someone needs to be able to prove it on demand.
Books, records, and Form ADV
The rule sits on top of a record-keeping obligation. You have to keep copies of all advertisements and the records that support them, including the documentation behind any performance figures. The 2024 risk alert flagged retention failures among more than thirty commonly observed deficiencies. Form ADV also now asks specific questions about your marketing practices, so what you say in an ad needs to line up with what you tell the regulator.
Social media and the finfluencer question
Everything above applies on social media, and the second prong of the advertisement definition is what makes social exposure so easy to underestimate. A compensated post from an influencer, an affiliate link, a paid ambassador, all of it can be an endorsement subject to the disclosure, oversight, and written-agreement conditions. The content you did not write, published by someone you pay, on a platform you do not control, is still your responsibility. That is the hardest surface to keep compliant by hand, and the one examiners increasingly look at.
How to operate this at scale
The Marketing Rule rewards firms that treat compliance as part of the marketing workflow rather than a gate at the end. In practice that means three things. Review before you publish, so risk warnings, disclosures, and substantiation are built in while the content can still be changed. Keep the record automatically, so every approval and its reasoning is captured as a by-product rather than reconstructed for an exam. And monitor what is actually live, including third-party and endorser content, so a non-compliant post gets caught in hours rather than at the next examination.
This is what Adclear is built to do for regulated marketing. Pre-publication approval checks an advertisement against the applicable rules and tells the marketer what to fix before it goes out. The audit trail captures the claim, the evidence, the disclosures, who approved it and why, generated at the point of decision. Post-publication monitoring watches live content, including endorser and affiliate handles, for drift and undisclosed promotions. Coverage spans the SEC Marketing Rule, FINRA Rule 2210 and other regimes, so a firm operating across marketing and compliance runs one process rather than several.
FAQ
Does the Marketing Rule apply to state-registered advisers? Not directly. It applies to SEC-registered advisers. State-registered firms follow their state's rules, many of which now mirror the federal model.
Can we use client reviews on Google or a third-party site? A testimonial is a testimonial wherever it appears. If you invite, incentivise, or use it in your marketing, the disclosure, oversight and other conditions apply.
Is a paid influencer post an endorsement? Yes, if the influencer is compensated in any form, directly or indirectly, and the post promotes your services. It needs the required disclosures and, above the de minimis threshold, a written agreement.
Can we put hypothetical or backtested performance on our website? Generally no. The rule requires you to tailor hypothetical performance to a specific audience, which a public website cannot do, and the SEC has brought charges over exactly this.
What is the fastest way to reduce risk? Build disclosures and substantiation into templates, keep an approval record for every advertisement, and monitor live endorser and social content rather than assuming it stayed compliant after it went out.
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