Heads up, RIA compliance teams: It's past time to green-light testimonials

It's hard to believe, given the anticipation and discussion that preceded it, but the SEC's revised marketing rule went into effect more than three and a half years ago. And while it's understandable that the testimonial floodgates didn't break open on May 4, 2021, it's even more surprising that there's still not much usage of such advertising in advisor marketing.

Ask an advisor why they hesitate to use testimonials, and most are likely to tell you their compliance team doesn't allow it — or if they do, that they make it impossibly difficult.

Respectfully, compliance teams, if you're still putting up roadblocks, it's past time to revisit your policies. 

There are straightforward steps that advisory firms can take to acquire and post compliant reviews. And given the well documented impact that online reviews exert on consumers, not allowing this valuable form of marketing stunts advisor growth and gives rival firms a recruiting edge. 

For stuck-in-the-old-ways compliance departments, here are suggestions for how advisors can obtain and post testimonials while staying on the right side of the regulations.

Ask one, ask all

Some advisors express an unwillingness to ask for testimonials because they fear coming off as too "salesy" or inappropriate. But for advisors who have decided to go ahead, it's important that they don't cherry-pick the clients who rave about them to friends and family. To avoid this SEC marketing rule trip wire, I suggest creating a template email to send to all current clients, thereby showing no favoritism.

READ MORE: How to craft creative and compliant marketing: 5 tips for advisors

When creating this template, avoid asking for a positive review. Also be careful of inserting language that would somehow influence the reviewer to give a certain response. 

Schedule the email for early morning delivery, say 5 a.m., on a weekday or on the weekend to avoid overlapping with time-sensitive emails. The afternoon before sending out the templated email outreach, call new clients who may feel a review is premature to give them a heads-up and provide context about the SEC marketing rule. And alert any clients who may be private people or have concerns about how their information might be displayed.

Then, wait. It's natural to expect reviews to quickly roll in, but like all marketing efforts this will take time and persistence. Be patient with the process.

Permissible testimonials only

After advisors have compliantly collected testimonials, the reviews need to be disseminated in an appropriate manner — which means ensuring they don't include objectionable content per the SEC rule. 

Highlights of what is deemed impermissible in a client review posted on a firm's website (or otherwise shared) include: 
●      Untrue statements of material facts or the omission of key facts that would make a statement misleading 
●      Statements an advisor can't substantiate as true
●      Information that would reasonably mislead a prospect 
●      Potential benefits or results from an advisor without also referencing the associated risks in a fair manner 
●      Including or excluding performance metrics in a way that would be flattering to the advisor

Advisors who wish to add client testimonials to their marketing efforts should meet with their compliance team and discuss a plan designed to get the ball rolling to create a firm-wide process for collecting and promoting advisor reviews — compliantly.