Tip for Updating Your Compliance Program: Marketing Rule Compliance

As we get deeper into Form ADV season, we are reminded that compliance officers face the thankless task each year of reviewing their policies and procedures to determine their adequacy and effectiveness, as required by Advisers Act Rule 206(4)-7. This review entails updating the firm's compliance program to reflect changes to relevant regulations and new regulatory guidance, and confirming the program is appropriately followed by the firm.  

We’ve compiled a series of tips to help you focus on the U.S. Securities and Exchange Commission (SEC) focus areas for 2023. You can read our previous tips here:  

• Tip #1 - Get ready for SEC focus on hedge clauses in advisory agreements 
• Tip #2 - Keep tabs on Continuing Education requirements 
• Tip #3 - Update your compliance program to address the SEC Risk Alert about MNPI compliance issues

Tip #4 - Prepare for an SEC examination focused on Marketing Rule compliance 

Unsurprisingly, the SEC Division of Examinations (EXAMS) stated in a Risk Alert, that future examinations will include a focus on compliance with the new Marketing Rule, specifically: 

• advisers’ marketing rule policies and procedures 
• firms’ ability to substantiate material statements of facts in advertisements 
• compliance with performance advertising requirements 
• updates to books and record procedures to comply with the Marketing Rule 

The alert also reminds firms to answer new questions in Form ADV about their marketing practices as part of the next annual update. 

Our guidance 

We advise firms to review the requirements of the Marketing Rule vs. the policies and procedures they put in place and confirm they understand the rule and meet all of its requirements. 

We’ve developed a number of resources to help firms interpret and comply with this rule. Please visit our Marketing Rule insights page here to access to FAQs, white papers, podcasts and webcasts, articles, and other helpful resources. 

How we help  

We are uniquely positioned to help firms comply with the new rule because we are the only compliance advisory firm that also has a performance practice. Each engagement is staffed with expertise from both an SEC regulatory perspective and the performance perspective.   

ACA assists clients with assessing the gaps between current marketing and advertising practices as well as existing policies and procedures against the new Marketing Rule.  The areas where we are seeing firms struggle the most include:  

• When a one-on-one presentation is considered an advertisement  
• Calculation of net of fees performance on hypothetical or extracted performance  
• Use of appropriate model fees  
• The new cash solicitation rules  
• Rules for related account performance  

Additionally, our Marketing Review technology workflow, supported by managed services, can help you automate and increase efficiencies for reviewing and approving marketing materials. Key features include:

• Tailored review and approval workflows
• Disclosure/disclaimer library and rules engine
• Support for video and audio files
• Dashboard, audit trail, and reporting
• Annotations and mark-up tools

If you have any additional questions about the Marketing Rule, or how ACA can help you comply, please reach out to your ACA consultant or contact our team here. 

Listen to our 2023 Regulatory Outlook webcast on demand 

We recently hosted a webcast to review the regulatory changes that will likely have implications on compliance programs in 2023, and provide recommendations to prepare for these changes. Our experts discussed rule proposals and adoption, examination and enforcement trends, and regulatory guidance. Watch our webcast for more insights to help you prepare your compliance program for this year’s focus areas.

Watch now