In 2020, the SEC announced a new, modernized “Marketing Rule” to update and replace the prior advertising and cash solicitation rules. These recent changes acknowledge that consumer expectations for information have increased and are designed to “allow advisers to provide investors with useful information as they choose among investment advisers and advisory services, subject to conditions that are reasonably designed to prevent fraud.” The Marketing Rule addresses the use of testimonials, endorsements, and third-party reviews. It lays out clear requirements and limitations as to how these forms of client feedback are collected, used, shared, or promoted. However, the SEC has also released guidance on how it may weigh various factors when evaluating a firm’s compliance with the Marketing Rule. Advisers should have a system in place to ensure they comply with the Marketing Rule’s requirements, as well as be aware of their firm's specific policies, before engaging with testimonials, endorsements, and third-party reviews

In short, a testimonial is a statement about the adviser from a current client or investor; an endorsement is a statement about the adviser from a non-client or non-investor. The Marketing Rule provides the following definitions: Endorsement. Statement by person other than current client or investor that: Indicates approval, support, or recommendation of the investment adviser or its supervised persons Directly or indirectly solicits any current or prospective client or investor to be a client of, or an investor in a private fund advised by, the investment adviser Refers any current or prospective client or investor to be a client of, or an investor in a private fund advised by, the investment adviser Testimonial. any statement by a current client or investor in a private fund advised by the investment adviser: About the client or investor’s experience with the investment adviser or its supervised persons That directly or indirectly solicits any current or prospective client or investor to be a client of, or an investor in a private fund advised by, the investment adviser That refers any current or prospective client or investor to be a client of, or an investor in a private fund advised by, the investment adviser

Absolutely! The Testimonial IQ platform enables advisers and firms to build compliance-forward systems and processes to request, generate, and share testimonials from clients. Our platform can be customized to suit your marketing goals and your firm's compliance requirements. By using Testimonial IQ, you can create a historical, auditable, searchable library of testimonials to use in accordance with your firm’s policies.

A comprehensive sampling of clients is likely to generate a few less-than-stellar reviews at some point, but that's OK! Studies find that consumers trust brands that have a mix of positive and negative feedback more than those with a flawless five star rating. In terms of the Marketing Rule requirements, the SEC does not require that you show every testimonial you receive, but it does warn against using testimonials to create misleading implications. We encourage our clients to work with their compliance departments to ensure they have standardized processes in place to avoid using testimonials in a misleading manner.

The Marketing Rule does not prohibit advisers from displaying content from third-party sources. However, any third-party content displayed or actively promoted by an adviser is likely to be deemed “adopted” as an advertisement, and thus subject to the requirements of the Marketing Rule. Advisers should work with their compliance departments to establish a processes for how they engage with content on third-party sites.

Many states defer to, or directly reference, the SEC guidelines in their own regulations. We encourage all advisers to work with their compliance departments to determine if their regulatory authorities have adopted the same or similar rules regarding testimonials or endorsements as the SEC’s Marketing Rule.

Testimonial IQ was designed to support advisers registered with both FINRA and the SEC. Testimonial IQ enables customizable workflows to require pre-approval for all content shared with prospective clients and maintains an audit trail of the review/approval process. We encourage advisers to work with their compliance departments to determine if they are permitted by their regulatory authorities to leverage testimonials or endorsements.

No, Testimonial IQ does not provide compliance or legal advice, nor are we endorsed by FINRA, the SEC, or any other regulatory body. We do not review, approve, or otherwise make recommendations regarding testimonials you may receive through our platform. Instead, we offer a platform to enable your team to develop a standardized process for leveraging testimonials or endorsements.

We take data security and storage seriously. We use state of the art practices to encrypt all data in transit and at rest. We partner with Amazon AWS for industry-leading cloud datacenter reliability and conduct ongoing penetration testing to keep your information secure. You have the ability to download full copies of all of your stored data at any time.