Peer pressure

Whether you just purchased a latte at a local coffee shop or rented a beachside house for a week in Cape Cod, the end of that experience typically offers the opportunity for the business to solicit a recommendation or review based on your experience. These reviews, whether provided in the form of a direct email or more prescribed and visible method like a Google My Business or Yelp listing, are then used by the business to showcase the quality of their product or service. In the digital world, reviews influence purchasers who seek third-party feedback before making a buying decision. The business can sift through reviews and showcase the best ones on their website or social media profiles. It’s a marketer’s dream, but not when it comes to the Securities and Exchange Commission’s Testimonial Rule.

Unfortunately, because of this ability to “cherry pick,” to use the SEC’s language, reviews and specifically testimonials are not permitted according to the SEC testimonial rule 2014-04. From a marketing, truth-in-advertising perspective, I completely understand the need to protect investors from inaccurate, performance-related statements that might provide unrealistic expectations and, in some cases, intentional deception.

“The SEC has only a few stated rules relating to advertising that are, overall, broad in nature,” says USA Financial’s director of advertising compliance, Dawn Thomason, “However, the prohibition of testimonials, of any kind, is specific and the very first on the list of tenants.”

As it relates to financial advisors, other opportunities that pose a problem with the rule include LinkedIn’s endorsement of skills and written recommendations. Endorsements only allow positive reviews and no opportunity for dissenting opinions. Recommendations can be hidden by the user if it doesn’t paint the desired picture.

The Good News About Reviews and Ratings

While the SEC is consistent in not allowing advisors to solicit or publish reviews, SEC guidance does provide allowance for “comments on an independent social media site only in situations when commentary is not restricted and the social media site allows for viewing and updating of all commentary in real-time.” In addition, an advisor cannot pay for advertisements that are next to the commentary. “The use of social media in marketing can be a powerful tool for an advisor,” says Thomason, “but can also be a huge liability for the firm if not done correctly and thoughtfully.”

What does all that mean in application? Google My Business, Yelp, Facebook, and other online business social media-type profiles can be created automatically based upon publicly available information and by general users who may not be affiliated with the business. The reviews found on these platforms cannot be cherry-picked and are published in real time, adhering to the two main requirements of SEC guidance. An even larger advantage for the business is that it has the ability to “claim” these public listings and update the profile information, but, as of the publishing of this article, they do not have the ability to moderate reviews. Therefore, these profiles would be permitted as it relates to SEC guidance so long as the advisor did not actively direct anyone to submit such a review.

I would contend that, while it is important to ensure public business listings are accurate and up to date, and reviewed by your compliance officer of course, trying to facilitate reviews that cannot be actively solicited and then later promoted is not the best use of marketing time and resources and walks a dangerous line with the SEC. Rather, it’s more valuable to spend time and resources on marketing opportunities that can be leveraged and promoted.

Online Marketing Opportunities

Despite limitations on soliciting and publishing reviews, credibility-building marketing opportunities are still available.

A strong marketing tool that advisors can use to their advantage is hiring a writer to get their verbal or loosely written ideas on paper to post regular, informative blogs. These postings can be published and advertised on social media sites, drawing traffic back to the advisor’s website. Blogs can also reflect thought leadership, that can educate and guide both existing and potential clients.

Podcasts are another great online marketing opportunity. Podcasts place you in front of potential clients using social media and audio to drive interest and focus. Educating listeners is a great way to share information while offering a tangible example of your unique value proposition for potential clients. This educational approach can bring potential clients right to your digital doorstep.

Finally, getting quoted in or publishing articles with local and national news outlets is another opportunity to leverage and create credibility. Whether you or a member of your staff are scouting opportunities out on HARO or working with a financial PR firm like Flackable (of which USA Financial is a client), these quotes and articles can then be promoted on your website and at prospecting events. Just be sure that these are earned opportunities based on your knowledge and merit and not ones where you paid to participate.

Despite the SEC guidance, financial advisors should be wary of the line between soliciting and marketing reviews. Rather than focusing on reviews that can result in potential regulatory ramifications with the SEC and FINRA, you can utilize blogs, podcasts, public business profiles, and earned PR for proven and effective inbound marketing opportunities. Leave soliciting and publishing reviews for when you open your lemonade stand.


John Jones, USA FinancialJohn T. Jones is the digital marketing and communication manager at USA Financial, a comprehensive financial services institution.