SEC Marketing Rule for Advisors: Testimonials, Ratings and Performance

Short answer

Rule 206(4)-1 governs how SEC-registered advisers advertise. It bans seven kinds of misleading content, allows testimonials, endorsements, third-party ratings and performance only when listed conditions are met, and requires you to keep copies of what you publish. [2] [1] Start with an inventory of everything you publish (website, any d/b/a site, social profiles, newsletters, pitch decks, mass emails), then check each item against the sections below.

The rule text and the SEC staff's FAQs are linked in the sources at the bottom of this page. This is a plain-words summary, not legal advice.

What counts as an advertisement

Two definitions apply. An advertisement is (1) any direct or indirect communication to more than one person (or to one or more persons if it includes hypothetical performance) that offers advisory services regarding securities to prospective clients, or offers new services to current clients, and (2) any endorsement or testimonial for which you give compensation, directly or indirectly. [2]

Left out: extemporaneous, live, oral communications; information in a required regulatory notice or filing; and hypothetical performance given in response to an unsolicited request. [2] A communication can be yours even if someone else sends it, because the rule reaches advertisements you disseminate "directly or indirectly." [1]

The seven general prohibitions

An advertisement may not: [2]

1. include an untrue statement of material fact, or omit one needed to make a statement not misleading
2. include a material statement of fact you lack a reasonable basis to substantiate if the SEC asks
3. include information reasonably likely to create an untrue or misleading implication about a material fact
4. discuss potential benefits without fair and balanced treatment of material risks or limitations
5. refer to specific investment advice that is not presented in a fair and balanced way
6. include or exclude performance results, or present time periods, in a way that is not fair and balanced
7. be otherwise materially misleading

Testimonials and endorsements

A testimonial is a statement from a current client; an endorsement is made by anyone else. [3] You may use either only if you meet these conditions: [2]

• Disclosures at the time it is disseminated. Clearly and prominently disclose whether the person is a current client, whether cash or non-cash compensation was paid, and a brief statement of material conflicts. Also disclose the material terms of any compensation arrangement and a description of the material conflicts.
• Reasonable basis and a written agreement. Have a reasonable basis to believe it complies, and a written agreement with the promoter describing the scope of activities and the compensation.
• No ineligible promoters. Do not pay a person you know, or with reasonable care should know, is an ineligible person (for example, someone with certain disciplinary history).

Exceptions. A promoter paid $1,000 or less (cash or equivalent) in the preceding 12 months, or not paid at all, is exempt from the written agreement and the ineligible-person rule, but the disclosures still apply. Your partners, officers, directors and employees (and people who control you or are controlled by you or under common control) are exempt from the disclosure and agreement requirements if the affiliation is readily apparent or disclosed and you document their status. Registered broker-dealers have separate exemptions. [2]

What examiners found (Dec 16, 2025 risk alert). [3]

• The most common problem was missing disclosures at the time the testimonial or endorsement was disseminated, often on websites, including d/b/a websites.
• Disclosures given by hyperlink instead of inside the testimonial, and disclosures in a smaller or lighter font. The adopting release says the disclosures must be at least as prominent as the testimonial and that a hyperlink does not meet the clear and prominent standard. [4]
• Current-client testimonials or former-client endorsements copied from third-party review sites onto the adviser's website without disclosing that they came from current or former clients.
• Gift cards given to clients to write reviews on third-party websites.
• Generic compensation disclosures that left out material terms of the payments.
• "Refer-a-friend" programs, lead-generation firms and social media influencers, sometimes without the adviser realizing the arrangement was an endorsement.
• Payments under $1,000 each time that added up to more than $1,000 in 12 months, so the de minimis exemption did not apply.
• No written agreement with paid promoters, or one that did not describe the scope and compensation.
• Paying promoters who were disqualified because of state securities regulator disciplinary history.
• Affiliated promoters whose affiliation was not apparent to clients when they saw the testimonial.
• Compliance policies not updated, or updated but not followed.

Third-party ratings

You may include a rating by a third party only if you have a reasonable basis to believe any questionnaire or survey behind it was structured so that favorable and unfavorable responses are equally easy to give and was not designed to produce a predetermined result, and you clearly and prominently disclose: [2]

1. the date the rating was given and the period of time it covers
2. the identity of the third party that created and tabulated it
3. if applicable, that you paid compensation, directly or indirectly, in connection with obtaining or using the rating

The December 2025 risk alert found advisers that: lacked enough information to form a reasonable basis about the survey; linked to third-party sites that showed the rating without the disclosures; used logos that did not identify the third party; listed a range of years that included a year the adviser did not receive the award; did not disclose payments for logo use, reprints, priority placement or referral links, or fees paid to be considered; and put disclosures in hyperlinks or small type. [3]

Performance

• Net with gross. Gross performance is allowed only with net performance of at least equal prominence, in a format that makes comparison easy, for the same period, with the same return type and methodology. Net performance reflects all fees and expenses; custodian fees may be left out. [2]
• Time periods. For a portfolio or composite (other than a private fund), show one-, five- and ten-year results with equal prominence, ending no earlier than the most recent calendar year-end. If the portfolio is younger, show its life. [2] The staff said it would not object to interim performance until a calendar year-end calculation is possible, generally for no more than one month (posted Apr 14, 2021). [5]
• No implied approval. Performance may not suggest the SEC approved or reviewed it. [2]
• Related and extracted performance. Include all related portfolios unless leaving some out does not materially raise results. Extracted performance (a slice of a portfolio) needs the total portfolio's performance provided or promptly offered. [2] The staff would generally not recommend enforcement for gross-only extracted performance if it is clearly labeled gross, the total portfolio's gross and net performance appear with at least equal prominence, and the total portfolio covers the entire extract period (updated Mar 19, 2025). [5]
• Hypothetical performance. Requires policies ensuring it is relevant to the audience's financial situation and objectives, and sufficient information on the criteria, assumptions, risks and limitations. [2]
• Predecessor performance. Allowed only if the people primarily responsible are now at your firm, the accounts are sufficiently similar, you show all substantially similar accounts (with an exception), and you disclose that the results came from another entity. [2]
• Model fees. Net performance may use a model fee that is no higher than the actual fee would produce, or the highest fee charged to the intended audience; whether net performance based on actual fees is misleading turns on the facts of each advertisement (staff FAQ posted Jan 15, 2026). [2] [5]

Social media, websites and third parties

The adopting release explains when other people's content becomes yours: [4]

• Adoption and entanglement. Third-party content can be attributed to you if you explicitly or implicitly endorse or approve it after publication (adoption), or if you involved yourself in preparing it (entanglement). It turns on the facts.
• Comments on your pages. Letting the public comment on your website or social page does not by itself make the comments yours, as long as you do not selectively delete or alter them and are not involved in preparing them. A "like," "share" or "endorse" feature alone does not engage the rule. Deleting negative comments or prioritizing positive ones does make the comments yours. Removing profane or unlawful content under a neutral, pre-existing policy does not.
• Links. A hyperlink to third-party content can bring that content under the rule, so think about adoption and entanglement before you link.
• Personal accounts of your staff. If you adopt and implement policies reasonably designed to prevent staff from using personal accounts to market your services, the SEC generally would not treat those posts as your marketing. The release suggests considering a prohibition, training, attestations and periodic review of staff accounts.

Recordkeeping

You must make and keep copies of all advertisements you directly or indirectly disseminate, with alternative methods for oral advertisements and specific records for performance, testimonials, endorsements and third-party ratings. [1] Advertisements and performance records are kept five years from the end of the fiscal year they were last disseminated, the first two years in an appropriate office. [6] For testimonials and endorsements, keep documentation that supports your reasonable basis for believing they comply. [3]

Update your compliance policies for each practice you use. Examiners found advisers that had not, and advisers that had but did not follow them. [3] See building a compliance program.

A note on FINRA Rule 2210 for dually registered representatives

If you are also registered with a broker-dealer, FINRA Rule 2210 applies to the member firm's communications with the public. [7]

• Categories. Correspondence goes to 25 or fewer retail investors in 30 days; a retail communication goes to more than 25 retail investors in 30 days; an institutional communication goes only to institutional investors. [7]
• Approval. A registered principal must approve each retail communication before use or filing, with limited exceptions. [7]
• Content. Communications must be fair and balanced, with no false, exaggerated, promissory or misleading statements, and may not predict or project performance, with listed exceptions. [7]
• Testimonials. Testimonials about investment advice or performance must prominently say they may not be representative and are no guarantee of future performance, and paid testimonials worth more than $100 must be identified as paid. [7]
• Social media. FINRA's Regulatory Notice 17-18 (Apr 25, 2017) treats linking to, or liking or sharing, specific third-party content as adoption, and firm-arranged influencer posts as entanglement. [8]

Ask your firm's compliance team which rules cover each communication; some will fall under both FINRA's rule and the Marketing Rule.

See also: marketing for financial advisors, RIA cybersecurity and client data protection (client testimonials use client information), and legal essentials for an independent RIA.

This guide is educational, not legal advice. Staff statements and risk alerts are not rules and create no new obligations; the rule itself controls. Talk to securities counsel before you publish a testimonial, rating or performance claim.