New Rules For RIAs On Testimonials, Performance Advertisements, And Marketing

Cathy Vasilev
01/13/21 4 PM EST
CFP® Live CPA
Program Id: 310503403
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New RIA Rules Crack Down On Five-Star RIA Marketing Gimmicks
The new advertising rules finally crack down on a problem plaguing the industry for over a decade: five-star advisor marketing gimmicks.

Many advisor websites feature badges for a “five-star wealth manager” or a “five-star advisor.” The badges and awards are often thinly disguised pay-to-play marketing scams.

Advisors do almost nothing to earn a five-star badge or award, except submit a fee to a marketing company that purports to check their licenses and certifications, which gives consumers little assurance of an advisor’s competence or integrity.

The new SEC advertising rules aim to end the gimmickry by requiring that RIAs actually believe the rating is designed to produce unbiased results. Third-party ratings in ads must disclose the date of the rating and the time-period it covers. In addition, IA reps must disclose if the ratings service received any cash or non-cash compensation.

If you have any awards or badges on your website and you do not have a reason to believe it is an unbiased rating, you have 18 months to comply with the new rule.


A4A offers a ratings service that meets all requirements in the new rules. It actually is unbiased and measures an advisor’s professionalism. Advisors4Consumers.com is a public list of advisors in the top-third for attendance of CE classes. Consumers can search for advisors in their zip code who have met stringent criteria.

Advisors4Consumers badge were created because the five-star marketing gimmicks have become widespread and make it more difficult for consumers to trust third party-rating services.

Advisors4.Consumers awards a free badge based on objective data measuring advisor attendance at A4A CE classes about estate and income-tax planning, strategically investing based on economic fundamentals and MPT, and using low-expense ETFs and funds to create diversified core portfolio. Advisors4Consumers.com is free with A4A membership.
 

New RIA Advertising Rules Adopted; First Change In Decades
For only the third time in 80 years, the Securities And Exchange Commission adopted new rules regulating investment adviser advertising, marketing, and sales.

The new rules on RIA advertising and cash solicitation represent a major change, permitting use of testimonials and investment performance in advertising with explicit disclosure requirements. The sweep of the new rules covers social marketing on LinkedIn, Yelp ratings, and updates related to books and recordkeeping rules. This class explains the new rules on: 

• what is an advertisement
• testimonials in advertisements
• third-party ratings disclosure requirements
• advertising a performance track record
• advertising performance history of acquired RIAs
• Accredited Investors eligible for private offerings
• document retention requirements
• policies and procedures
• state-registered RIAs  

The Investment Advisers Act was established in 1940. In 1961, the SEC added rules regulating advertisements. In 1979, rules regulating cash solicitations by advisers were added. RIA advertising rules have remained unchanged for decades, amid a  financial services revolution caused by the abolition of fixed-rate commissions, introduction of money market accounts, broader use of limited partnerships, an explosion in mutual funds, the advent of 401(k)’s, IRAs, and qualified retirement accounts, the growth of Charles Schwab’s independent financial advisor business, hedge funds, the Web, a tech stock boom and bust, a global financial crisis, Bitcoin, and the list could go on. Point is, the ‘40 Act’s marketing rules were antiquated.

This class is led by an instructor drawing upon over 25 years of FINRA and SEC compliance experience at broker/dealers, serving registered reps as well as CCOs and CEOs at RIAs.

Instructor Cathy Vasilev co-founded Red Oak Compliance Solutions, which advises 400 RIAs on regulatory compliance, in 2010. She previously served as the Assistant Vice President of Supervisory Systems and Controls at NFP Securities, an independent B/D, and RIA, and supervised 75 representatives as an Associate Manager at Prudential, performing all compliance functions for a branch. 

Cathy began her career as a stockbroker for Salomon Smith Barney after earning a Masters of Business Management degree. She is a member of the Association of Compliance Professionals, National Society of Compliance Professionals, Compliance and AML Professionals; and maintains FINRA Series 7, 24, 26, 63 as well as Life and Health licenses. 

This webinar is pending eligibility for one hour of CE credit towards the CIMA® and CPWA® certifications, and it is eligible for CFP® CE, PACE credit toward the CLU® and ChFC® designations, and live CPA CPE credit.

Compliance Services For A4A Members
Cathy Vasilev, cofounder of a compliance consultancy to hundreds of RIAs, is teaching a series of classes on A4A, and A4A membership includes a 20% discount on compliance services from Red Oak Compliance, plus free access to software for managing compliance content reviews more efficently. 

A4A members, please log in and sign up to receive a free compliance services account

Over the past decade, A4A earned the trust of CFP®, CIMA®, CPA, ChFC®, and CFA® fiduciaries by providing a new kind of continuing education curriculum, a content stream for running a practice about low-expense strategic investing based on MPT and focused on estate and income tax planning. A4A enables you to spend more time with clients and not researching investment, tax, and financial planning knowledge piecemeal from disparate sources. And, because A4A's content is member-sponsored, classes are free of commercial influence. 

Fritz Meyer, a revered independent economist, Robert Keebler, a leading accounting and legal educator for over three decades, and Craig Israelsen Ph.D., who has published monthly in Financial Planning since 1996 about low-expense portfolio design, form A4A's core curriculum for professionals. The core gives a fiduciary the minimum required to run a professional practice based on knowledge from trusted thought leaders. 

Adding a compliance instructor to A4A's curriculum integrates classes about compliance fills an important gap in A4A's curriculum for running a professional financial services firm. Integrating A4A's services with Red Oak's compliance solutions is a new benefit of A4A membership designed to increase efficiency in RIAs.

Compliance services for A4A members doesn't just teach you about compliance; it gives you a way to implement what you learn. 

 

How To Choose Tech Vendors Meeting RIA Compliance Requirements
This class was originally sceheduled for January 13, 2021 but was replaced by the class about the nmew RIA marketing rules.  

Choosing a tech vendor requires considering the consequences of the vendor's shortcomings and failures.

At this session, advisors learn the key considerations and the right questions to ask a vendor about compliance, including:

• Will the vendor be relied on as an RIA's official books and records repository?
• What records should you keep to meet RIA due diligence requirements
• Disaster recovery plans of vendors

This class is led by an instructor drawing upon over 25 years of FINRA and SEC compliance experience at broker/dealers, serving registered reps as well as CCOs and CEOs at RIAs, Instructor Cathy Vasilev co-founded Red Oak Compliance Solutions, which advises 400 RIAs on regulatory compliance,  in 2010. She previously served as the Assistant Vice President of Supervisory Systems and Controls at NFP Securities, an independent B/D, and RIA, and supervised 75 representatives as an Associate Manager at Prudential, performing all compliance functions for a branch. Cathy began her career as a stockbroker for Salomon Smith Barney after earning a Masters of Business Management degree. She is a member of the Association of Compliance Professionals, National Society of Compliance Professionals, Compliance and AML Professionals; and maintains FINRA Series 7, 24, 26, 63 as well as Life and Health licenses.

 
 
The first eight minutes of this session covers upcoming and recent classes and client education solutions, and is not included in the time calculation for Continuing Education credit.
 
Instructor bio: Cathy Vasilev
Cathy Vasilev advises registered investment advisers, insurance companies, hedge funds and broker-dealers on all areas of compliance, including advertising, supervision, surveillance, licensing and registration of personnel. After 10 years as a compliance manager at NFP Securities, and supervising a branch with 50 advisors at Prudential, Cathy in 2010 co-founded Red Oak Compliance Solutions, which is dedicated to ensuring the operational efficiency of each area and compliance with industry and company policies and procedures.
 
 

More than 50 hours of CFP® CE credit and more than 100 hours of Investments & Wealth Institute® credit on replays available 24/7 to paying members ($120 annually) of
Advisors4Advisors.com. CPAs are eligible to receive CPE for attending live webinars only. To learn how to receive continuing professional education credit viewing webinar replays, please see our detailed instructions.

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