A recent private-letter ruling issued by the SEC giving advisors the okay to provide certain new clients with a “satisfaction guarantee” is causing quite a stir.

Three advisory firms–Trainer, Wortham & Company; Froley, Revy Investment Company; and Starbuck, Tisdale & Associates, each a subsidiary of First Republic Bank–asked the SEC last year if they could provide a money-back guarantee to certain new clients. The clients could obtain a refund of their advisory fees, for any reason, within the first year of service.

Surprisingly, the SEC said yes. Some in the advisor community say the fact that firms are willing to offer a money-back guarantee shows just how competitive the industry has become. Neal Solomon, managing director of WealthPro in Gloversville, New York, says the money-back guarantee tactic is most assuredly “competition driven,” but he doubts “true” financial planners will participate in such a “marketing game.” It will be the “mid-sized institutions seeking to gather assets quickly” who will gravitate toward this approach, he predicts.

Solomon finds the ruling troubling. “I hate to introduce the word(s) ‘guarantee’ or ‘money-back guarantee’ to any investment program,” he says. The “concept of providing a money-back guarantee for a professional service will diminish the perceived value of the advisory work not only in the first year, but permanently.”