Free Self-Assessment — Rule 206(4)-1
How exposed is your firm to a Marketing Rule enforcement action?
The SEC's Marketing Rule (Rule 206(4)-1) is its most-cited RIA exam priority in 2024–2025. Answer 20 yes/no questions across five compliance areas. Takes under 3 minutes. Your score and a section-by-section breakdown are emailed to you for free.
1 — Testimonials & Endorsements
0 / 4 answered
If your firm uses client testimonials or endorsements in any advertisement, do you have a written agreement with each promoter covering disclosures, oversight, and disqualification?
Weight: 3 — required for paid/non-cash promoters above de minimis threshold
Do all testimonials and endorsements include the required disclosures: (a) that it is a testimonial/endorsement, (b) whether compensation was paid, and (c) if not a current client, a statement to that effect?
Weight: 3 — substantive disclosure requirement
Have you screened all promoters for disqualifying events (disciplinary history, regulatory bars, certain criminal convictions) as required by Rule 206(4)-1(b)?
Weight: 2 — disqualification is a bright-line rule
Are all cash and non-cash compensation arrangements with promoters (including revenue sharing, directed brokerage, or other benefits) documented and disclosed?
Weight: 2 — non-cash comp frequently cited in exams
2 — Hypothetical Performance
0 / 4 answered
If you present hypothetical, back-tested, or model performance to retail investors, do you have written policies and procedures tailoring those presentations to the financial situation and investment objectives of the intended audience?
Weight: 3 — retail hypothetical performance requires specific policies
If you use back-tested performance, do all presentations include the required disclosures: that the performance is back-tested, the time period used, and that actual results may differ materially?
Weight: 3 — substantive disclosure; commonly deficient in exam sweeps
Do you maintain a record of all hypothetical/model performance presentations — including the assumptions, methodology, and intended audience — for at least five years?
Weight: 2 — books-and-records obligation
Are hypothetical performance presentations excluded from general, mass-market or broad digital advertising where you cannot control who views them?
Weight: 2 — broad retail distribution of hypothetical performance is prohibited
3 — Third-Party Ratings
0 / 4 answered
For any third-party rating you display (e.g., Barron's, Forbes, NerdWallet, Five Star), do you disclose the name of the rating organization and the date or period covered by the rating?
Weight: 2 — required disclosures for all third-party ratings
If you paid for (or provided other consideration to obtain) a third-party rating, do you clearly disclose that you compensated the rating organization?
Weight: 2 — paid ratings require compensation disclosure
If the rating criteria are available to you, do you disclose those criteria (or explain how the rating was determined)?
Weight: 2 — criteria disclosure required when known
Have you reviewed all website, pitch deck, and marketing collateral for stale or outdated third-party ratings that may now be materially misleading?
Weight: 2 — stale ratings are a common exam finding
4 — Performance Presentation
0 / 4 answered
When you show performance in advertisements, do you present both net- and gross-of-fee returns with equal prominence (or net-only if you choose)?
Weight: 3 — gross/net parity is a hard requirement
Do you present 1-, 5-, and 10-year (or since inception if shorter) performance periods for all portfolios you include in advertisements?
Weight: 3 — required time-period presentation
If you present "related performance" (a subset of accounts with similar investment policies), do you include all accounts that fit the strategy rather than cherry-picking top performers?
Weight: 2 — cherry-picking is a prohibited practice
Have you reviewed all performance advertisements for "extracted performance" (performance of a subset of a portfolio) to ensure required additional disclosures are included?
Weight: 2 — extracted performance has specific disclosure obligations
5 — Substantiation & Books-and-Records
0 / 4 answered
Can your firm substantiate every material statement of fact in every advertisement on demand — before you publish the ad (not just after receiving an exam request)?
Weight: 3 — pre-publication substantiation is a core requirement
Are all advertisements (including social media posts, website copy, emails, and pitch decks) retained for at least five years from the date of last use per Rule 204-2?
Weight: 3 — 5-year retention is a bright-line rule
Does your firm have a written review and approval process for all advertisements before publication — including social media posts by personnel?
Weight: 2 — pre-approval policy reduces deficiency risk significantly
Have you updated your Form ADV Part 2A to accurately reflect your current marketing practices — including use of testimonials, third-party ratings, and performance advertising?
Weight: 2 — ADV consistency with marketing is an exam comparison point
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About the Marketing Rule
Common questions
What exactly does Rule 206(4)-1 cover?
The Marketing Rule replaced the old advertising and solicitation rules for registered investment advisers. It covers all advertisements — testimonials, endorsements, hypothetical performance, third-party ratings, and general performance presentations. It became effective November 4, 2022, and the SEC has flagged deficiencies in virtually every sweep exam since.
What are the prohibited practices under the Marketing Rule?
The rule has seven general prohibitions: (1) untrue statements of material fact, (2) material omissions, (3) misleading implications, (4) unsubstantiated material facts, (5) unfair or unbalanced presentations, (6) lack of fair and balanced treatment of material risks, and (7) any other untrue or misleading implication. These apply to all advertisements regardless of channel.
Does the Marketing Rule apply to social media?
Yes. Any communication that meets the definition of "advertisement" — including LinkedIn posts, Twitter/X posts, YouTube videos, and email newsletters distributed broadly — is subject to the Marketing Rule. Testimonials from clients in social media comments or reviews are also covered if you solicit or use them.
What is the SEC's enforcement posture on the Marketing Rule in 2025?
The SEC's Division of Examinations listed Marketing Rule compliance as a top priority in its 2024 and 2025 exam priority letters. Common deficiencies: missing promoter agreements, inadequate hypothetical performance disclosures, third-party ratings without required disclosures, and gross-only performance without net-of-fees presentation. Enforcement actions involving Marketing Rule violations have increased materially since 2023.