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Regulation and Compliance > State Regulation

Third Party Marketers to Public Entities Launch Compendium of State Rules

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The Third Party Marketers Association (3PM) has launched a State Compendium to help its members sift through the scads of rules, regulations and prohibitions that apply to them when working in various states.

The state compendium covers the marketing rules that third party marketers must follow when marketing to all public entities, including pension funds.

“The regulatory environment for third party marketers is changing and changing fast,” Stacey Havener, 3PM’s president, told AdvisorOne. The challenge, she says, is that “there is no cohesion” among states’ regulations for third-party marketers.

As it stands now, the compendium covers California, Florida, Georgia, Hawaii, Illinois, Kentucky, New Jersey, New Mexico, New York, North Carolina, Ohio and Wisconsin. Havener says 3PM the compendium is a collection of “field insights” gathered by third party marketer practitioners about what regulatory changes are taking place in each state. She expects the compendium to be updated on a quarterly basis.

The association held a webcast on June 28 titled “The State of the States: Insight into the current regulatory environment for 3PMs”—which is the first in a series to introduce the compendium to its members.

As 3PM explains, the compendium contains a matrix which indicates which states have total prohibitions on the use of 3PMs, as well as states that have enacted some restrictions or requirements, such as a ban on the use of contingency fees or the need for some type of disclosure. “We’re getting pushback from the states” on third-party marketers’ contingency fees, which is how they are compensated. “Some states have a ban on this type of compensation.”

Each state also contains a detailed description of the rules pertaining to specific public pension plans, since each plan’s regulations can vary even within the same state.

As Havener explains, third-party marketers can represent a specific investment product, or they can market to a specific channel—like retirement plans, brokers-dealers, and as she does, to registered investment advisors (RIAs).

3PM defines a third party marketer as an outsourced intermediary that provides investment managers with value added marketing and sales services. When it comes to traditional investment management, many fund managers outsource marketing either to complement an internal sales resource or to fulfill the complete marketing function.


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