On January 15, 2026, the SEC Division of Investment Management released two new Frequently Asked Questions (FAQs) on the Marketing Rule under the Advisers Act. One clarifies how advisers should present net performance in marketing materials when the fees charged to the advertised audience differ from the fees historically charged. The other permits investment advisers to compensate certain promoters for endorsements or testimonials even if a self-regulatory organization, like FINRA, has issued an order with respect to that promoter’s disqualifying conduct within the prior ten years.
Use of Model Fees vs. Actual Fees in Investment Adviser Marketing
The adopting release for the Marketing Rule included a footnote that caused some advisers to question whether the rule permits marketing materials to present net performance based on actual fees paid by existing clients. Footnote 590 states, “If the fee to be charged to the intended audience is anticipated to be higher than the actual fees charged, the adviser must use a model fee that reflects the anticipated fee to be charged in order not to violate the rule’s general prohibitions.” The new FAQ clarifies that an adviser may present performance based on actual fees in its marketing, provided the adviser illustrates the effect of anticipated fees on performance, whether through appropriate clarifying disclosure or other means.
What the SEC Clarified on Net Performance and Fee Disclosures
In response to questions about how advisers should account for differing fee structures in performance advertising, the SEC clarified that the Marketing Rule provides flexibility, provided that net performance is presented in a fair, balanced, and non-misleading manner.
- The Marketing Rule permits net performance calculated using actual fees or using a model fee.
- If the anticipated fees exceed actual fees charged, advisers should consider the facts and circumstances of each advertisement to ensure results are shown in a fair and balanced manner.
- Avoid misleading presentations and provide appropriate disclosures. The staff reiterates flexibility and allows for various means to illustrate the effect of differences between actual fees and anticipated fees on performance.
What Advisers Should Consider When Presenting Net Performance
Advisers may use actual fee or model fee net performance. In those instances where anticipated fees are higher than legacy fees, firms should apply sound judgment and provide clear disclosures, so performance results are fair and balanced and do not mislead the reader.
The SEC Clarifies Marketing Rule Disqualification Standards for Testimonials and Endorsements
Rule 206(4)-1(b)(3) prohibits an investment adviser from compensating a promoter for testimonials or endorsements if the adviser knows, or reasonably should know, that the person providing the testimonial or endorsement has been subject to certain “disqualifying events” within the ten years preceding dissemination. The Rule defines “disqualifying event” to include (among other things) SEC opinions, SEC orders, and certain final orders by self-regulatory organizations (SROs).
The Rule’s definition of “disqualifying event” contains an exception that allows advisers to compensate a person subject to an otherwise disqualifying SEC opinion or order if the SEC did not bar or suspend that person or prohibit them from acting under the federal securities laws. This exception has the effect of allowing advisers to (1) compensate such people for testimonials and endorsements and (2) engage them as solicitors or third-party marketers. However, the Rule does not contain a similar exception for SRO final orders, such as FINRA final orders.
SRO Final Orders and Promoter Disqualification
The new FAQ effectively extends the existing exception for SEC disqualifying events to SRO disqualifying events, subject to the following conditions:
- The sole reason the person is otherwise disqualified must be the SRO’s final order.
- The SRO must not have expelled or suspended the person from membership, barred or suspended the person from association with other members, or prohibited the person from acting in any capacity.
- The person must be in compliance with the terms of the SRO’s final order, including, but not limited to, paying disgorgement, prejudgment interest, civil or administrative penalties, and fines; and
- For a period of ten years following the date of such final order, any advertisement containing the testimonial or endorsement must disclose that the person providing the testimonial or endorsement is subject to an SRO order, and include the order, or a link to the order on the self-regulatory organization’s website or other public disclosure system, if available.
Marketing Rule Disclosure Obligations for Compensated Promoters
This new FAQ enables an adviser to select a persona subject to certain types of SRO final orders to serve as a compensated promoter, provided that any endorsement or testimonial, whether oral or written, is transparent about the existence of the final order.
Putting the SEC’s Marketing Rule Guidance into Practice
ACA helps advisers apply the SEC’s latest Marketing Rule guidance by reviewing performance advertising, fee disclosures, and testimonial arrangements; enhancing policies and controls; and supporting firms in demonstrating fair, balanced, and transparent marketing practices.