The SEC now has a clearer picture of the top marketing practices currently being employed by investment advisers. A full 98 percent of Commission-registered advisers responded to the eight new marketing-related questions posed on Form ADV, the newly released Investment Adviser Industry Snapshot co-authored by the IAA and NRS shows (see related story, page 1).
Performance information tops list
The Form ADV data revealed that nearly 40 percent of advisers include performance information in their advertisements. This was the most common advertising practice being utilized by advisory firms, the snapshot reveals. Rounding out the top five most common ad practices were:
- The inclusion of hypothetical performance (20.8 percent of advisers)
- The inclusion of a reference to specific investment advice (20.5 percent of advisers)
- The inclusion of third-party ratings (15.3 percent of advisers)
- Paid compensation for testimonials, endorsements, or third-party ratings (13.8 percent of advisers)
SEC examiners will surely use the data when determining who to target for an marketing-specific exam. Affiliate title RCW recently reported that a new SEC exam document request letter (registration required) defines key terms for hypothetical, model and predecessor performance and testimonials. Examiners asked the adviser to hand over “three examples for each category” of advertisements that it deploys, eg, pitch books, performance presentations, blogs, pamphlets, etc.