For Financial Advisor Ads, a New Frontier
Written by Steve Garmhausen in Barron’s on December 17th, 2019
Could RIAs soon shell out big bucks for celebrity endorsements?
It sounds far-fetched right now, but as the SEC overhauls its advertising rules for the first time since 1961, the financial advisor world is abuzz over how much might be permitted. “It’s going to be interesting to see the first person have LeBron James as a spokesman for their advisory services,” says Jud Mackrill, chief marketing officer at Carson Group, an $11.5 billion firm in Omaha, Nebraska. (For more articles about independent advisor topics, sign up for The Independent, our just-launched monthly newsletter for indies.)
Even if we never see athletes, models or actors flogging advisory firms, the SEC’s proposed advertising rules, released last month, show that a big shift is on the horizon. “This is potentially a landmark change,” says Ric Edelman, founder of the big RIA that’s now Edelman Financial Engines. “The fact that the SEC is willing to update rules that have been in place for 40 years is wonderful.”
In response to years of complaints, the SEC is overhauling strict rules put in place more than a half century ago to protect consumers from dubious and misleading claims. The biggest change: It would allow the use of client testimonials and investment performance in ads. Both have been big no-no’s up until now. The commission also wants to extend its rules beyond print and airwaves to encompass online communications. To this point advisors have been cautious about internet communications, where the rules of the road have been a patchwork of guidance from the SEC.