Adam Schaub

  By Adam Schaub, Vice President, Platform Product Management, RegEd

About the Author: Adam Schaub has been in compliance in the financial services industry for more than 20 years. He most recently led the Compliance Services team at Avantax, and formerly served as Chief Compliance Officer at 1st Global. Adam joined RegEd in 2021, where he is Vice President of Platform Product Management.

All Aboard: Leveraging Technology to Address the New SEC Marketing Rule

The light at the end of the proverbial tunnel is in sight, as the compliance date for the SEC’s new Marketing Rule is November 4, 2022.  But is that light the dawn of a new age of marketing promotion for your RIA, or is it a train headed toward you like an unstoppable force, driven by your financial professionals and fueled by their ambitions to use client testimonials and endorsements?  Or maybe a bit of both?

Most firms appear to not have taken the SEC up on the offer in the new rule to move forward with revising their P&Ps prior to the compliance date, as it was an all-or-nothing proposition.  While compliance professionals recognize the importance and attraction that the new rule offers the business side, the creation of P&Ps is a pre-requisite as they are the rails that keep the train on track.  If the P&Ps and supporting supervisory structure are not ready when the Marketing Rule pulls into the station in November, the compliance department will need to at a minimum indicate that endorsements, testimonials, performance advertising, and so on are prohibited or restricted.

The task of developing procedures and enabling compliance with the various disclosures, verification of material facts as opposed to opinions, and the standard approval and archiving concerns, among all the other requirements, can seem daunting.  And while there are other parts of the rule such as performance advertising, much of the focus has been on testimonials and endorsements.  In the pandemic and social-media powered world, online reviews are a core to promotion and may be the most challenging to supervise.

In this regard, Compliance professionals can take some solace that they or their predecessors have been here before, first with websites and email and then with LinkedIn, Facebook, and other social media sites.  For all of these old “iron horses” there was great concern of the ability to supervise, which was overcome over time and with new technology.  Fortunately, there is existing technology that can assist with the many tasks related to your firm’s implementation of the new Rule.

With that in mind, the focus of this article are on some other items that your firm should consider adding to its to-do list as part of its preparation and subsequent compliance processes, and the technology that can assist you.

Part One: Creation, Communication, and Acknowledgement of Policies and Procedures:

1. Create/Update P&Ps. There are numerous resources available on the web, along with many consultants who can assist in the actual crafting of the wording for your P&Ps, and so we won’t spend time on the actual P&P content.  But given that the P&Ps are the mainline track of your supervisory system, through which all the other tasks are connected, they will likely be the result of discussions among the compliance, business and marketing teams to land on an approach that best helps in the leveraging of this rule while staying within the bounds of reasonable supervision.  While every firm’s policy will be based on the decisions of these groups and will vary for each firm, there are solutions such as RegEd’s CODE P&P Management offering that can help you manage, maintain, and archive all versions of your policy, alleviating the administrative burden of coordinating the end-to-end process while promoting transparency across the organization.

2. Create and centrally manage disclosure language and disclosure documents. Depending upon where your policy lands, there will be disclosures necessary within advertising material as well as disclosure documents that will need to be provided by promoters.  It is important for all parties across the organization to be aware of and aligned on these disclosures, for the business and marketing personnel to have easy access when developing content, and for the disclosures to be centralized and kept current.  RegEd offers Disclosure Management and a Content Library within its Advertising Review Platform that meet these requirements.

3. Amend prior guidance. As with any new policy, your firm should undertake a review of prior communications, newsletters, compliance bulletins, and so on and revise as necessary.  Depending upon how your firm’s content management system (if you have one) is set up, the nature of this challenge can vary.  A starting point may be to use your advertising review solution.  RegEd’s solution for example has a robust search capability that can help you search by keyword, item type, time frame, among a multitude of other search criteria, and quickly identify prior materials that need to be pulled or revised.  Similarly, leveraging a system such as RegEd’s CODE P&P Management solution will allow you to quickly identify any other policy manuals or other documents that need to be amended to include the polices related to the new Rule.

4. Communicate. Work with your internal communications/marketing team to come up with a communication plan, and leverage all avenues for the greatest visibility. In addition to traditional means such as a rep-wide email communication and posting on your intranet site, consider adding information and policy links to your marketing submission platform splash/info pages and send out targeted communications to all of your advisers who already use social media and/or have websites. As with any change, the message needs to be communicated early and often. If your firm has already analyzed the rule and determined how to proceed, it would be wise to communicate your intentions and timeline to your advisers, if you have not done so already.

5. Back to basics. And because you’re already communicating to your advisers regarding new policies, it’s a good opportunity to provide a reminder on your firm’s general social media P&Ps, archiving requirements, and any other applicable policies.

6. Provide training. Your training plan is not just for your advisers and the business and marketing teams, but also for your compliance team (advertising review, branch audits, supervision). This training can include any combination of stand-alone training, inclusion in your annual compliance meeting, CE coursework, or other training vehicles.  Your firm also may consider making training a pre-requisite to engage in the use of testimonials and endorsements.  RegEd has coursework regarding the new marketing rule which could be used for this purpose.

7. Attestations. With all the communications and training, your firm should have everyone on the northbound train at this point. To confirm everyone’s understanding of the policy, it’s a good idea to include a requirement for each adviser to attest that they’ve read and understand the policy.  This can be accomplished by a policy attestation through your P&P platform (such as RegEd’s CODE P&P Management) or through your annual compliance questionnaire.  Your firm could even consider issuing a one-off questionnaire that seeks to verify their knowledge.



This article is part one of a two part series. Visit here to read part two.

About RegEd’s Enterprise Advertising Review

RegEd’s Enterprise Advertising Review solution simplifies compliance with advertising regulation, reducing review time by more than 50%, and in some cases, by close to 80%. It also improves the accuracy and consistency of reviews. For example, Lexicon Detection automatically flags problematic keywords and phrases using firm-customized business rules while Smart Disclosures detects and confirms that submission items contain the proper disclosures.

More than 50 leading financial services firms rely on Enterprise Advertising Review to review more than 4 million marketing, advertising, and customer communications per year.

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