Marketing Execs Expect Wide Acceptance of New SEC Advertising Rule

Many say the new regulation permitting endorsements and testimonials in adviser advertisements brings it up to current consumer standards.

Marketing and retirement plan executives expect plan advisers will wholeheartedly embrace the new advertising rule from the Securities and Exchange Commission (SEC) that will allow financial planners, starting May 4, to include testimonials and endorsements in their advertising and marketing materials.

“I think it absolutely will inspire advisers to embrace this new rule and increase their advertising, and it may happen pretty quickly,” Kevin Darlington, general manager of Broadridge Advisor Solutions, tells PLANADVISER.

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Chris Hooper, director of seminar services at M&O Marketing, agrees. “I work with retirement planning professionals, and I can tell you, they think this is going to be a big deal,” he says. “We also work with insurance-only professionals, and they have been able to use endorsements forever. It is an important way to reach prospects. It is a great way to build credibility and trust.”

Investment Adviser Association (IAA) President and Chief Executive Officer Karen Barr says the previous SEC advertising rule had a “very broad definition of testimonials and endorsements that, essentially, precluded any statement on a client’s experience, which is the normal way that people get business, so we welcome this change permitting advisers to use additional tools in their outreach.”

Broadridge conducts a fair amount of research on how different adviser segments market themselves, Darlington says. “We think grow-oriented advisers, especially, will wholeheartedly embrace the new SEC advertising rule because of how dramatic an opportunity it gives them to change how they market themselves,” he says. “If you are an adviser who, a year from now, does not include testimonials in your advertising, you will look naked compared to your competitors. We expect testimonials and endorsements will become a staple part of advisers’ advertising and marketing. The shopping experience for prospects looking for an adviser will be improved, as well.”

Darlington says Broadridge views the SEC’s decision to implement the new rule as stepping up to the plate with regards to how consumers shop for goods today, since many use tools such as Yelp to view other consumers’ take. “Choosing an adviser is an incredibly big decision,” he says. “Crowdsourcing has become a way that consumers shop today, and it only makes sense to extend this to the selection of an adviser, particularly a retirement plan adviser.”

Likewise, Larry Stadulis, co-chair of fiduciary governance at Stradley, says, “If you look at TV at any point in a day, you will see that the bulk of commercials are testimonials,” so the SEC has, essentially, brought its advertising rule, which had not been changed in more than 60 years, up to date, he says. “The most common question I have gotten from my retirement plan advisory clients with respect to their advertising is, ‘How can I include a testimonial in my ads without it appearing to be a testimonial?’”

Broadridge also expects advisers will feature endorsements—particularly video endorsements—prominently on their websites and that advisers will actively seek out endorsements from their clients, Darlington says. Advisers are also likely to distribute pamphlets including client testimonials at any meeting they hold, Hooper says.

Cathy Clauson, senior vice president of retirement solutions at AssetMark, expects the new rules will have the greatest impact on smaller retirement plan practices, those with $100 million or less in assets under advisement (AUA), as larger practices already have the infrastructure in place to readily prospect.

However, Ethan Corey, a partner with Practus LLP, says he thinks any adviser who pays a client to give a testimonial, be it in cash or in kind, such as with reduced fees or expanded services, could run afoul of the SEC and risk the chance of enforcement action and fines. “Any adviser who has a conflict of interest in running an endorsement or testimonial will have to expose that, and they might end up deciding that exposing those conflicts of interest dilutes the effectiveness of the ad to the point that they end up deciding not to run it,” he says.

The Value of Determining a Retirement Plan’s Philosophy

Industry experts say delving into why a sponsor has a retirement plan can be very instructive for plan design and outcomes.


A seldom-discussed tool that can help improve retirement plans is determining the plan’s philosophy, or understanding the underlying reason why a company is offering the plan. Retirement industry executives say that while it may sound lofty, determining a sponsor’s philosophy for their plan can be very instructive in strengthening the design of the plan and, as a result, improve the outcomes for participants.

“This is broader and potentially more impactful than having an investment policy statement [IPS] or retirement committee charter,” says Kevin Crain, head of workplace solutions integration for Bank of America. “It instructs a plan sponsors to give serious thought to what they want to achieve for their employees to help them live comfortably in retirement. It forces them to think about how paternalistic they want to be in that philosophy. It also raises the question of whether or not they want to take care of employees who have retired. I also believe that any company offering a financial wellness program needs to go through the philosophy exercise. It is imperative to have a retirement plan philosophy as a pillar of that financial wellness offering.”

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A plan’s philosophy will play a critical role in its design and in helping the company decide to offer other important benefits, such as a health savings account (HSA), Crain says. Retirement plan philosophies are not very prevalent today, he says. It’s also not very common for companies to actively encourage their workers to take advantage of all the benefits they offer, Crain adds.

“This is an area where companies need to do more work, and those that have a retirement plan philosophy need to make that a reality,” Crain says. “Employers need to become more proactive with their plan design, such as including robust escalation at meaningful deferral levels, sending information to employees about their projected retirement income, and offering retirement income options for those who are retired, either through a target-date fund [TDF] or an annuity.”

Buck makes it a point to help each and every one of its plan sponsor clients develop a retirement plan philosophy, says Sandra Pappa, a principal in the wealth practice at Buck. “It helps them realize that the ultimate goal of their plan is to help each employee build sufficient savings for retirement,” Pappa says. “It is best when that philosophy aligns with the company’s demographic makeup, culture, the financial constraints of its workers and their retirement needs. The philosophical framework will support distinct retirement plan priorities, which will then drive decisions about the plan and necessary changes.”

Along with developing a philosophy, the plan sponsor and adviser need to analyze strengths and weaknesses in the plan by parsing through recordkeeping data, Pappa says. “This can be instructive when a change is made or to help the sponsor realize if further adjustments are needed,” she says.

UHY helps its clients develop a philosophy by asking them what their objectives are for their plan, says Therese Wolfe, a principal at the accounting firm. “Most plans cannot achieve every objective, but we try to help them meet as many as possible,” Wolfe says.

In a blog about developing a retirement plan philosophy, Portfolio Evaluations Inc. says it is time-consuming but beneficial: “Establishing a plan sponsor philosophy is a challenging process, one that needs ample time and attention. It requires thoughtful contemplation of what a retirement plan’s objective should be and how a retirement plan committee can affect that objective. While potentially an arduous task, organizations that go through this process should find it easier to make plan decisions going forward, saving time down the road, while having those decisions be better aligned with their retirement plan’s intended purpose.”

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