The SEC Marketing Rule, Rule 206(4)-1, in Plain English

What counts as an advertisement, the seven things no adviser ad may do, the rules for testimonials, ratings and performance, and what examiners keep finding.

By Felipe Saldarriaga · Updated Nov 10, 2026 · Rule text and SEC pages read Nov 10, 2026 · Not legal advice

Who the rule applies to

The rule binds investment advisers registered, or required to be registered, with the SEC under section 203 of the Advisers Act.

It does not bind state-registered advisers or broker-dealer representatives, who answer to their own rules, though dual registrants can sit under both.

What counts as an advertisement

The rule defines "advertisement" in two parts, and everything else in it hangs on that definition.

The first part covers any direct or indirect communication to more than one person that offers your advisory services to prospective clients, or new services to current ones.

One person is enough if the message includes hypothetical performance.

Live, unscripted spoken communication is excluded, and so is information in a required filing or notice.

The second part covers any testimonial or endorsement you pay for, in cash or in kind, even when it reaches one person at a time.

The SEC's own fact sheet says the first part "excludes most one-on-one communications."

A message written once and sent to a list is not one-on-one, even when each copy carries a first name, so treat it as an advertisement.

The seven things no advertisement may do

These general prohibitions apply to every advertisement, whatever else it contains.

Number two is the one that catches marketing copy.

"Conflict-free," "the best retirement planner in town," "we never lose money": each is a claim of fact you must be able to prove on demand.

Testimonials, endorsements and promoters

A testimonial is a statement by a current client about their experience with you, or one that recommends or refers people to you.

An endorsement is the same kind of statement by anyone who is not a current client: an influencer, a former client, a referral network or a lead-generation firm.

The SEC calls the person giving either one a promoter.

The old advertising rule banned testimonials outright; the Marketing Rule allows both, under conditions that grow with the pay.

"Clear and prominent" has a specific meaning here.

The adopting release says the disclosures belong inside the testimonial itself, at least as prominent as it, and that a hyperlink to them is not enough.

On pay, the release is just as concrete: if a specific amount of cash is paid, the advertisement should disclose that amount.

Third-party ratings

A third-party rating is a ranking of your firm by an unrelated company that rates advisers in the ordinary course of its business.

You may advertise one only with a reasonable basis to believe its survey made favorable and unfavorable answers equally easy and was not built to produce a set result.

The ad must also show, clearly and prominently, the date of the rating, the period it covers, who created it, and whether you paid anything for it.

In the September 2024 sweep, four firms advertised ratings, some more than five years old, without those dates.

Performance

If your marketing never shows a return figure, the rule's longest section never touches it.

If you do show one, these are the conditions.

• Gross needs net: net performance beside gross, with at least equal prominence, over the same period and method.
• Fixed time periods: one, five and ten years, ending no earlier than the latest calendar year-end, or the portfolio's life if it is younger.
• No SEC approval claims: never say or imply that the SEC reviewed or approved your numbers.
• Related performance: include every similar portfolio, unless leaving some out would not make the results materially higher.
• Extracted performance: a slice of a portfolio only if you offer the whole portfolio's results too.
• Hypothetical performance: models, backtests and projected returns only with written policies matching it to the intended audience, plus the assumptions and risks behind it.
• Predecessor performance: results from a former firm only if the same people ran similar accounts, with full disclosure.

Hypothetical performance is where the first enforcement landed.

All 14 advisers charged in September 2023 and April 2024 had put hypothetical performance on public websites without the required policies, and they paid $1.05 million between them.

The records you must keep

The books and records rule, Rule 204-2, was amended with the Marketing Rule.

• Every advertisement: a copy of each one you disseminate, directly or indirectly.
• Testimonials and endorsements: the disclosures given, if not in the ad itself, and the documents behind your reasonable basis.
• Performance: the accounts, books and working papers that show how every figure was calculated.
• How long: five years from the end of the fiscal year the advertisement was last used, the first two in an appropriate office.

Two of the nine firms charged in September 2023 had also failed to keep copies of their advertisements.

What examiners keep finding

The December 2025 risk alert lists what exam staff saw most often with testimonials and endorsements.

• Required disclosures missing at the moment the testimonial or endorsement was shown, often on advisers' websites.
• Disclosures behind a hyperlink, or in a smaller or lighter font than the testimonial.
• Generic compensation disclosures that left out the actual terms of referral payments.
• No written agreement with a paid promoter, or payments split below $1,000 each while the 12-month total went above it.
• Gift cards given to clients for reviews on third-party sites, without a basis to believe the required disclosures were made.
• Promoters paid despite disciplinary histories with state securities regulators.

Where your own list fits

Marketing to people already on your list does not take you outside the rule.

An email or text written once and sent to many past prospects offers your services to more than one person, so it is an advertisement and the seven prohibitions apply.

What a plain message avoids is the rule's heaviest machinery.

• No performance: "Would you like a time to talk this month?" carries no return figure, so none of the performance conditions are triggered.
• No testimonial or rating: nothing to disclose, date or document.
• Nothing to substantiate: no "best," no "conflict-free," no promise.
• One record: the approved template and every message sent, kept in your firm's archive.

If an outside firm sends those messages for you and is paid per meeting, ours included, ask your CCO whether the arrangement makes that firm a promoter.

We found no SEC guidance on that exact arrangement, so it is your compliance team's call, not a vendor's.

Questions advisors ask about the Marketing Rule

A message your CCO can approve in one read

The rule rewards marketing that says less and proves everything it says.

The plainest message an advisor can send is a question to someone who already knows them.

At Pipenomics we send messages like that, by text, in your name, to the prospects already on your list, using templates your CCO approves.

You pay only for the calls that actually happen.

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