FA-IQ reached out to advisors to ask: The SEC has allowed advisors to use testimonials, endorsements, hypothetical performance, and third-party ratings for advertisements if they meet certain criteria outlined by the SEC. Will this benefit the average FA’s practice?

Alex Zengo, chief compliance officer at Americana Partners. Houston-based Zengo has been in the industry for more than 20 years. Americana Partners had $2.6 billion in client assets as of October 2021, according to the firm’s latest Investment Adviser Public Disclosure ADV.

“The modernization of the SEC’s advertising rule will certainly be advantageous to advisors and firms’ practices.

Why? Anytime you can use additional avenues to reach out to prospects and clients is an opportunity for new connections and growth.

How? The SEC is recognizing that social media, consumer reviews and testimonials are resources for who is and is not an effective financial advisor. That is a huge step forward in the financial services advertising space.

Alex Zengo
Allowing for financial services advertising to have more depth and information from multiple sources allows people to really dive into the advisor and their respective firm before making an educated decision.

Use of hypothetical performance returns have been a difficult road to comply with for newer firms in the independent space. The new rules help define how to appropriately use performance in advertising and clears up antiquated policy. These updates, although mostly positive, still require close monitoring and review by compliance professionals to be sure of proper adherence.”