{"id":7987,"date":"2022-09-27T08:01:52","date_gmt":"2022-09-27T08:01:52","guid":{"rendered":"https:\/\/emoneyadvisor.com\/?post_type=thought_leadership&p=7987"},"modified":"2023-11-03T17:37:02","modified_gmt":"2023-11-03T17:37:02","slug":"the-secs-new-marketing-rule-whos-using-testimonials-and-how","status":"publish","type":"thought_leadership","link":"https:\/\/emoneyadvisor.com\/blog\/the-secs-new-marketing-rule-whos-using-testimonials-and-how\/","title":{"rendered":"The SEC\u2019s New Marketing Rule: Who’s Using Testimonials and How"},"content":{"rendered":"

When it comes to marketing, advisors have always relied on social proof, including asking clients for referrals. So, when the Securities and Exchange Commission unveiled its modernized marketing rule<\/a> that lifts the ban on certain types of testimonials for SEC-registered firms in December 2020, many were hopeful.<\/p>\n

Testimonials, ratings, and reviews hold promise for financial planners. As the profession has moved away from a focus on investment performance and toward holistic financial advice, sharing real-life client experiences carries more weight. The SEC marketing rule change will hopefully pave the way for financial planners at RIAs to communicate their value to prospective clients in impactful ways.<\/p>\n

Imagine a future where a client vetting you to be their advisor sees 25 detailed reviews\u00a0with star ratings attached. This type of social proof, which consumers already use to select everything from a law office to a plumbing company, might become the crucial lifeblood of marketing efforts<\/a>. However, with the compliance date of November 4 creeping up, the research shows not many RIA firms have been able to capitalize on this opportunity yet.<\/p>\n

Crunching the Marketing Data<\/strong><\/h2>\n

It looks like a slow and steady marketing approach has won out for the moment. More than 64 percent of SEC-registered firms did not complete the ADV Section 5L, newly created to show RIA marketing activities.1<\/sup> That\u2019s according to fintech company Indyfin\u2019s analysis of Form ADV data this spring. Among the roughly one-third of RIAs who didn\u2019t leave this field blank, Indyfin found that a mere 2 percent were using testimonials in their marketing. Endorsements\u2014a review of an advisor by someone other than a client, such as an accountant\u2014also had little adoption, with 2 percent using them.<\/p>\n

Taking a closer look at third-party ratings, the numbers get interesting. More than 9 percent of the firms who completed ADV Section 5L indicated that they use third-party ratings in their marketing materials. Third-party ratings run the gamut, from \u201ctop advisor\u201d lists to ratings published on sites like Yelp and Google. Although the sample is small, these numbers show the relatively important role these types of rankings have in advisor marketing\u2014and hints at future possibilities, including the potential rise of advisor-specific ratings platforms that mirror those in health professions.<\/p>\n

Remembering the \u201cSqueaky Clean\u201d Saga<\/strong><\/h2>\n

The data shows that even firms with updated compliance policies are taking a \u201cwait and see\u201d approach to testimonials and endorsements. These cautious firms might remember the saga of the Squeaky Clean Reputation marketing agency, whose efforts to solicit Yelp reviews for advisors earned five-figure fines and bad press for those practices in 2018.2<\/sup><\/p>\n

No one wants to be the first to run afoul of the SEC\u2019s new testimonial rule. Nearly 78 percent of compliance professionals ranked marketing and advertising as the hottest compliance topic for 2022, up 20 percentage points from the year prior.3<\/sup><\/p>\n

Protecting Clients\u2019 Privacy<\/strong><\/h2>\n

The risks don\u2019t end at fines from the SEC, however. The issue of maintaining clients\u2019 privacy and confidentiality also comes into play.<\/p>\n

For example, Google includes a reviewer\u2019s full name with their review by default. Asking for every client to write you a Google review, in line with guidelines meant to prevent advisors \u201ccherry-picking\u201d only the clients who will give a favorable review, might result in a full client list made available online for all to see.<\/p>\n

That\u2019s one of many reasons why the first step of any new marketing strategy should be to check in with your compliance staff to make sure you\u2019re not putting the practice at risk.<\/p>\n

Boosting Your SEO Strategy<\/strong><\/h2>\n

Other benefits of online client ratings include a boost to advisors\u2019 search engine optimization efforts. The quantity and quality of a firm\u2019s Google reviews<\/a>, for example, can influence where that practice shows up in search results. Firms trying to get more potential clients to find them through a web search will likely try an SEO strategy that leverages user-generated content such as reviews–this can help with prospecting for financial advisors<\/a>.<\/p>\n

To do this, you can set up a Google Business Profile<\/a> for your practice (or if you already have one, learn how to optimize it<\/a>). Formerly known as a Google My Business snippet, this is a box that pops up in the righthand side of a search results page with a company\u2019s reviews, website address, hours of operation, phone number, and much more.<\/p>\n

\"\"<\/p>\n

The idea is that when someone in your area types in \u201cfinancial planner near me,\u201d your local page will pop up. They will then see from this profile whether you have reviews they can read to help validate your services. For strategies on how to gather more reviews, read my previous article on collecting testimonials<\/a>.<\/p>\n

Showcasing Your Testimonials<\/strong><\/h2>\n

Once you have a handful of detailed reviews on Google, you can create a testimonials page on your own advisor website where you\u2019ll showcase ones that best speak to your practice.<\/p>\n

You\u2019ll need to be careful to include the correct disclosures and will likely need language such as \u201cto read all of the Google reviews, go here.\u201d In the spirit of transparency, this will link out to your Google Business Profile where the reader can view every review.<\/p>\n

All About the Client Experience<\/strong><\/h2>\n

The strategies here can help you take advantage of the new SEC marketing rule as the November compliance deadline nears\u2014taking care to follow your organization\u2019s guidelines, of course. With any luck, these new lines of communication will provide more clarity for consumers and more business for financial planners providing a top-notch client experience.<\/p>\n

For more eMoney research on the latest marketing strategies and tactics, read our eBook: The Financial Advisor\u2019s Guide to Digital and Social Media Marketing<\/a>.<\/p>\n

Sources:<\/strong><\/p>\n

1. \u201c2022 Form ADV Research Report.\u201d Indyfin,<\/em> https:\/\/hub.indyfin.com\/research\/2022-form-adv-research-behind-the-numbers<\/a>.<\/p>\n

2. Neal, Ryan. \u201cSEC Censures, Fines Advisers for Yelp Endorsements.\u201d InvestmentNews<\/em>, 2018. July 11. https:\/\/www.investmentnews.com\/sec-censures-fines-advisers-for-yelp-endorsements-74989<\/a>.<\/p>\n

3. \u201c2022 Investment Management Compliance Testing Survey.\u201d Investment Adviser Association<\/em>, 2022. https:\/\/investmentadviser.org\/wp-content\/uploads\/2022\/06\/2022_IMCT_Results.pdf<\/a>.<\/p>\n

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.<\/p>\n","protected":false},"author":45,"featured_media":8022,"template":"","thought_leadership_cat":[90],"class_list":["post-7987","thought_leadership","type-thought_leadership","status-publish","has-post-thumbnail","hentry","thought_leadership_cat-marketing"],"acf":{"left_sidebar_ads":false,"right_sidebar_ads":false},"yoast_head":"\nThe SEC\u2019s New Marketing Rule: Who's Using Testimonials and How<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/emoneyadvisor.com\/blog\/the-secs-new-marketing-rule-whos-using-testimonials-and-how\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The SEC\u2019s New Marketing Rule: Who's Using Testimonials and How\" \/>\n<meta property=\"og:description\" content=\"When it comes to marketing, advisors have always relied on social proof, including asking clients for referrals. 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