Adam Schaub

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

In Regulatory Notice 19-31, FINRA encouraged member firms to be precise and succinct in their explanations and disclosures in marketing materials. The intent of this encouragement is for firms to create fair and balanced materials without the important client disclosures getting crowded out by unnecessary or overcomplicated language. Similarly, using unnecessary disclosures can obscure the marketing message, make the material unreadable or at the very least, give pause to a potential client when they see a thousand characters of fine print. Additionally, the use of incorrect or outdated disclosures can expose a firm to regulatory risk, and decrease time to market due to time misspent correcting and recorrecting disclosure language. Due to these intersecting priorities, it is in the common interest of Compliance, Marketing, and the business side to utilize (if not agree upon) a set of well-written, client-friendly, and regulatory-acceptable disclosures, and to know when and how these disclosures1 must be used.

This is easier said than done. Even in situations where all parties come to an agreement on (or are told by Compliance or Legal to use) a specific disclosure, the challenge comes in making sure that the same disclosure is used again when the content makes it necessary. Without a centrally managed set of disclosures, along with specific information as to how and when the disclosure must be used (bold font, ‘prominently displayed’, etc.), a firm will not be able to have a successful, repeatable process. In many cases, the standard fallback (without centralization) is to find a recent, similar marketing piece where the disclosure was necessary, copy it, and paste it into the new material. The challenge here is two-fold: you need a robust, easy-to-use search function for previously-approved marketing materials, AND you also need to rely upon someone to remember some combination of the who, what, where, when and why the disclosure was previously used, in order to find it quickly and accurately. And there’s no guarantee that you will find the most recent version of the disclosure – while a user may have been able to find it before, past performance is no guarantee of future success, so they say.

Absent centralized disclosure management, advertising submitters and content creators may take the approach with disclosures to put something in and say “I believe this is correct. Compliance will tell us if there is a new one to use.” Some submitters may just leave out the disclosure entirely, and rely upon the Compliance team to identify the missing disclosure and communicate it to the submitter. Furthermore, employee turnover can mean constant relearning, retraining, and loss of tribal knowledge of prior disclosure policies at the firm.

There is no doubt that this is a common challenge, but hope is not lost. The following are some steps that you can take to ‘write’ the ship, so to speak.

Compliance Tips for Effectively Managing Advertising Disclosures

1. Partner with your Marketing team. While not an absolute, Marketing employees are better at words than Compliance. They can help with the clarity and brevity of disclosures, and they understand the customer perspective.  Also, Marketing and Compliance are often in the same boat at the tail-end of the review process.  By involving your Marketing team in the crafting of disclosures, you are not only building a stronger relationship with an important business partner, you are given an opportunity to train them and help them understand the ‘why’ of disclosure language.


2. More isn’t (necessarily) better. It may be difficult to believe, but just because that financial planning software you’re reviewing has a maximum disclosure of 1000 characters, it doesn’t mean you have to use all 1000 characters.  Compliance personnel should challenge themselves to take FINRA’s encouragement to heart and focus on the required and most important disclosures.  Taking on this challenge will result in Compliance staff that have a better understanding of what is required vs. what is not, and can help to counter the perception that the Compliance team is not being ‘business-friendly’ in its approach on disclosures.  That said, in order to protect your principal licenses, along with your firm and your reps, if you’re unsure of whether or not a disclosure is needed, you should include it.  Keep in mind that FINRA has stated that their advertising analysts will not comment in review letters if disclosures are unnecessary, so you may be better off being safe than sorry.  FINRA’s analysts are available to discuss this or other issues, or you can contact their Advertising department and ask for the “Analyst of the Day” if your firm’s analyst is not available.


3. Beg, borrow and steal. While it may go against the essence of Compliance personnel, take a look via your favorite search engine at the disclosure language used by other firms.  Not only does it give you an outside perspective or affirmation to share with your Marketing and Business teams, it can save you time in crafting your own disclosures for areas where you don’t have ones already.  That said, as Compliance personnel, we know that copyright rules apply and ultimately ‘borrowing, but tailoring to your firm’ is probably the most appropriate approach.


4. Make your disclosure methodology understandable. When you craft your disclosure library, group your disclosures where they may naturally fall and/or in a way that is understandable to other teams.  For example, you may have disclosures that are grouped together because they apply to specific products, and others may be for specific communication methods such as social media or client events.  Other disclosures may be for specific investment concepts or approaches such as IRA rollovers, and yet others may apply to marketing content such as charts, graphs, hypothetical examples or testimonials.  And where possible, include an explanation of the ‘why’ a disclosure is needed, whether that’s due to a specific rule, regulatory guidance, or simply because the firm has decided it is important in order for the content to be fair and balanced.


5. Leverage the technology available to you. Providers such as RegEd have Disclosure Management tools that allow customers to maintain a standard list of disclosures.  These tools have permissioned access levels and gatekeeping to make sure that everyone has access to the most current version of the disclosures, as well as instructions for submitters and compliance reviewers on when and how to use those disclosures.  If you don’t have access to this technology, then a central Word or Excel document, Sharepoint page, or other permissionable resource may be the best alternative to use.  The key point is to make an effort to lock down your set of disclosures, have a central gatekeeper (either a permissioned system or a single disclosure ‘czar’), and put processes in place to make sure it stays updated.


6. Train Your Submitters. To the extent possible, providing training to your firm’s reps (and anyone else who is creating and submitting material) can help in moving toward a faster time to market for their advertising materials.  The combination of understanding the basic required disclosures (at a minimum), and where to confidently find the most current version of those disclosures, puts Compliance and the Business in a win-win. This is particularly important for Compliance teams, where resources are stretched as thin as the turnaround time expectations of submitters.


Having a centralized set of disclosures will help the firm from a branding standpoint, as there is consistency in the tone and approach in materials.   This consistency can also improve the service level with reps, as it empowers either the reps to insert the proper disclosures or more likely, for the Compliance team to apply the correct disclosure upon the first review of the material.  It helps from a regulatory standpoint, to protect the firm against risk and to help the Compliance team be consistent in their application of disclosure requirements.  Finally, providing empowerment to these teams in the form of a common tool will help each party be able to focus on their respective priorities:  the development of engaging content, the engagement of business-building activities, and the overall protection of reps, firms, employees and the clients they serve.  As the saying goes, it helps to all be on the same page.

1 For example, regulators prefer disclosures be woven into the marketing material where possible, rather than included as a footnote, such as this.

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