SEC Allows Financial Advisors to Utilize Reviews

Zoe Team

Mar 11, 2021

4 min read

Key Takeaways

The SEC has updated its marketing rule for financial advisors.
Advisors can now incorporate consumer reviews into their marketing strategies.
This shift increases transparency while requiring careful regulatory compliance.

Frequently Asked Questions

What did the SEC change regarding advisor reviews?

They updated the marketing rule, formally allowing financial advisors to utilize consumer reviews.

How does this affect consumers?

It provides more social proof, helping you gauge an advisor’s reputation before hiring them.

Are all reviews now permitted?

Advisors must still follow strict SEC guidelines to ensure reviews are not misleading or deceptive.

SEC Allows Financial Advisor Reviews

Zoe Financial’s View on Advisor Review, now that the SEC has updated the marketing rule allowing financial advisors to utilize consumer reviews.

For years, it’s been nearly impossible to find adequate research on financial advisors online. This is due to the fact that financial advisors have been prohibited from using reviews and client testimonials in their marketing materials. However, this rule first adopted in 1961 is finally being updated. In late 2020, the U.S. Securities and Exchange Commission (SEC) voted to allow financial advisors to start using reviews and testimonials in their advertising. The new rule allows endorsements and testimonials to be used in marketing materials, as well as performance reports and third-party ratings. While this is exciting news for both advisors and prospective clients, there are several restrictions and rules that advisors must adhere to.

Understanding the SEC’s New Rule on Financial Advisor Reviews

Any advertisements that include an endorsement or testimonial must include a disclosure that clearly states if the individual giving the testimonial was compensated. It must also disclose if the individual giving the testimonial is a client. The disclosures must be included with the testimonials rather than in a separate online location. With this new rule in place, advisors must also tolerate (legitimate) negative reviews, as each testimonial used must be accurately expressed.

Additionally, advertisements that use testimonials and reviews are prohibited from including any statements that the advisor cannot prove. Therefore, if an advisor uses an advertisement that states he or she is an expert in retirement planning, the advisor must be able to provide evidence to prove that statement is true.

How Advisors and Clients Will Benefit from This Change

This rule is likely to benefit financial advisors and help them market themselves to a wider audience outside of their existing client network.

People tend to rely on online reviews for most products or services they are in the market for so this will provide the transparency they have come to expect

Prospective clients will also greatly benefit from this change. Now that advisors can include reviews on their websites and marketing materials, clients will no longer have to rely on speaking directly to one or two existing clients to develop an opinion.

Above all, this move is one step closer to providing a more transparent experience for consumers when it comes to whom they should hire as their financial advisor.

By enabling advisor reviews, the industry as a whole will have to continue adapting towards the client being the ultimate decision-maker.

Zoe Financial & Advisor Reviews

Now that it will be much easier for prospective clients to find reviews for financial advisors, it is important that clients be able to find trustworthy reviews that truly represent clients’ experiences. Zoe Financial is the an ideal source to find unbiased reviews on the top independent financial advisors in the country.

Zoe works by connecting potential clients with a network of trusted advisors. Zoe’s network consists of the top 5% of independent, fiduciary financial advisors in the country, which helps weed out any salesmen or commission-based advisors. Because Zoe is extremely selective of which advisors are included in their network, they have already vetted many advisors across large and small firms nationwide.

Also, Zoe’s clients have been connected with advisors from all over the country and provided feedback on their experiences. This model allows us to offer honest, unbiased client reviews. The advisors in our network are not employed by Zoe but simply included in a vetted network to be connected with clients. Because of this, we do not have a stake in the advisors’ reviews the same way a firm that employs the advisors might.

Find an Advisor through Zoe

By simply answering a few questions, Zoe can begin connecting you with a trusted financial advisor that meets your specific needs. Working with an experienced financial advisor can help you craft a solid plan to begin achieving all of your financial goals.

SEC Allows Financial Advisor Reviews

Zoe Financial’s View on Advisor Review, now that the SEC has updated the marketing rule allowing financial advisors to utilize consumer reviews.

Understanding the SEC’s New Rule on Financial Advisor Reviews

How Advisors and Clients Will Benefit from This Change

This rule is likely to benefit financial advisors and help them market themselves to a wider audience outside of their existing client network.

People tend to rely on online reviews for most products or services they are in the market for so this will provide the transparency they have come to expect

Above all, this move is one step closer to providing a more transparent experience for consumers when it comes to whom they should hire as their financial advisor.

By enabling advisor reviews, the industry as a whole will have to continue adapting towards the client being the ultimate decision-maker.

Zoe Financial & Advisor Reviews

Find an Advisor through Zoe

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