SEC Marketing Rule: What Advisers Must Know in 2026

Complying with the SEC marketing rule can be harder than it looks on paper. The rule replaced two outdated frameworks with something more flexible, but flexibility creates decisions, and every decision needs documentation. Examiners are asking more than whether your disclosures exist; they're asking whether you can show that review happened before materials went out. Here's what the rule actually requires and how to build a program that holds up.

At A Glance:

• Rule 206(4)-1 applies to all SEC-registered advisers and governs every advertisement your firm distributes, directly or indirectly.
• Testimonials and third-party ratings are now permitted, but each requires written agreements, conflict disclosures, and due diligence. The December 2025 Risk Alert flagged both as active exam priorities.
• Performance advertising requires gross and net figures with equal prominence, standardized one-, five-, and ten-year periods, and full context for any extracted results.
• Five firms paid $200,000 in combined penalties in April 2024 for posting hypothetical performance publicly without audience-relevance policies in place.
• Greenboard pre-checks marketing materials against the SEC Marketing Rule and creates a 17a-4 and WORM compliant audit log for every review action.

What the SEC marketing rule is and why it matters

Rule 206(4)-1 under the Investment Advisers Act of 1940 is the SEC's governing framework for how registered investment advisers market their services. The SEC adopted it in December 2020, with a compliance date of Nov. 4, 2022. Before it existed, advisers operated under two separate, decades-old rules: the 1961 Advertising Rule and the 1979 Cash Solicitation Rule. Neither was built for a world of social media, testimonials, or sophisticated performance advertising.

The new rule consolidated both into a single, principles-based framework. That shift mattered because the SEC fundamentally expanded what advisers can do in their marketing, including using client testimonials and third-party ratings for the first time, while simultaneously raising the bar for disclosure, documentation, and oversight.

For most advisers, that combination is where the compliance challenge lives. More flexibility means more decisions to make, more disclosures to verify, and more materials to review before anything goes out the door, a pattern that often turns into a compliance bottleneck at growing firms.

Who the rule applies to

The rule applies to any investment adviser registered or required to be registered with the SEC under the Investment Advisers Act of 1940. If your firm has SEC registration, the Marketing Rule governs your advertising.

State-registered advisers are generally not subject to SEC Rule 206(4)-1, though many states have adopted parallel rules worth reviewing separately. Advisers exempt from SEC registration, such as those relying on the private adviser exemption, also fall outside the rule's scope, but that exemption is narrow and firms near the registration threshold should confirm their status with counsel.

A few quick scope checks:

• SEC-registered? The rule applies to you.
• State-registered only? Check your state's advertising rules.
• Exempt reporting adviser (ERA)? The Marketing Rule does not apply, but other Advisers Act provisions may.
• Operating across multiple entities? Each registered entity is assessed separately.

One area that trips up financial advisors: the rule covers advertisements distributed by the adviser directly or indirectly. Content published by a third-party promoter or distributed through a solicitor can still be your responsibility.

What counts as an advertisement under the rule

The rule defines "advertisement" in two parts. The first covers any communication an adviser makes to more than one person that offers advisory services, offers to manage securities, or promotes the adviser generally. The second covers any testimonial or endorsement an adviser pays for, regardless of how many people receive it.

A few exclusions matter in practice:

• One-on-one communications prepared for a specific person and not distributed more broadly
• Responses to RFPs directed at a single prospective client
• Extemporaneous, live oral communications

That last exclusion is narrower than it sounds. If a presentation is scripted or prepared in advance, it likely loses the extemporaneous exemption. And if a one-on-one communication gets forwarded or reused, it can re-enter advertisement territory.

When in doubt, treat it as an advertisement and apply the rule's requirements.

The seven general prohibitions

Every advertisement an SEC-registered adviser distributes must clear seven baseline prohibitions under Rule 206(4)-1(a). These apply regardless of content type, channel, or audience.

• Untrue statements of material fact
• Misleading omissions that make a statement false or misleading in context
• Unsubstantiated material claims or implications
• Cherry-picked performance results that exclude comparable periods or accounts without fair context
• Unfair or unbalanced presentations of potential benefits without disclosing risks
• Misleading references to SEC registration or oversight, since registration is not an endorsement
• Any other fraudulent, deceptive, or manipulative practice

SEC exam observations have flagged the fourth and fifth prohibitions most frequently. Advisers showing only favorable time periods, omitting underperforming strategies, or listing benefits without corresponding risk disclosures have drawn scrutiny frequently since the rule took effect.

These prohibitions are the floor. Passing them doesn't mean an advertisement is compliant with the rule's other requirements around testimonials, performance, or disclosures.

Testimonials, endorsements, and third-party ratings

Before the marketing rule, client testimonials were essentially off-limits. Now they're permitted, but only if advisers satisfy specific conditions for testimonials, endorsements, and third-party ratings.

Testimonials and endorsements

Any compensated testimonial or endorsement requires a written agreement with the promoter, clear disclosure of whether the person is a current client, and disclosure of any compensation or conflicts of interest. Advisers must also confirm the promoter isn't a "bad actor" under the rule's disqualification provisions.

Third-party ratings

Using a rating or ranking in an advertisement requires reasonable due diligence on the rating methodology and disclosure of the date, the period covered, and whether any compensation was paid to obtain or promote it — a review step that AI-native compliance systems now handle automatically as part of the pre-check workflow.

The December 2025 Risk Alert from the SEC's Division of Examinations flagged both areas as active exam priorities, citing insufficient disclosures in testimonial advertising and inadequate due diligence on third-party ratings. Advisers using awards, rankings, or client reviews in any marketing channel should audit those materials before an examiner does.

Performance advertising requirements

Performance advertising is one of the most technically demanding parts of the rule, and it's where exam deficiencies show up with regularity.

Net and gross performance

If an advertisement includes gross performance, it must also show net performance with at least equal prominence, calculated over the same time period. You can't lead with gross returns and bury net figures in a footnote. Both numbers need to be visible and comparable.

Standardized time periods

Advertisements showing portfolio performance must include one-, five-, and ten-year returns, or since inception if the track record is shorter. The SEC designed this to prevent advisers from cherry-picking only the windows where performance looks best.

Related and extracted performance

If you advertise the performance of a subset of securities from a broader portfolio, that's extracted performance. The advertisement must show the performance of the total portfolio from which those securities were extracted. Related performance, meaning performance of other accounts with substantially similar investment policies, carries parallel requirements.

No implied SEC endorsement

Any language suggesting the SEC has reviewed or approved an adviser's investment results is prohibited. Registration confers no endorsement of performance.

Phrases like "SEC-registered, audited performance" or "returns verified by the SEC" are the kind of language that crosses this line. Both imply that the SEC has reviewed and validated the adviser's results, which it has not. The SEC's registration process assesses whether an adviser meets statutory requirements to operate; it says nothing about the quality, accuracy, or legitimacy of specific investment returns. Using phrasing that blurs that distinction, even unintentionally, is prohibited under the rule.

A practical self-check: if a reader could reasonably conclude that a government agency has reviewed or stands behind your performance figures, rewrite the language before it goes out.

The pattern that draws exam attention is advisers presenting curated slices of their history without the required context, which is why the AI compliance architecture a firm builds on matters before committing to any system. Compliance review of performance materials should confirm that every figure displayed clears all four requirements above.

Hypothetical performance: what's allowed and what isn't

Hypothetical performance sits in its own category under the rule, and it's where some of the earliest enforcement landed.

In April 2024, the SEC charged five registered investment advisers for advertising hypothetical performance to the general public without proper policies and procedures in place. The five firms, GeaSphere LLC, Bradesco Global Advisors, Credicorp Capital Advisors, InSight Securities, and Monex Asset Management, collectively paid $200,000 in combined penalties.

Using hypothetical performance lawfully requires meeting three conditions:

• Policies and procedures reasonably designed to confirm the performance is relevant to the likely financial situation and investment objectives of the intended audience
• Information available to recipients explaining how the hypothetical performance was calculated
• A clear explanation of the limitations and risks of using hypothetical results

The audience relevance requirement is the one most commonly missed. Posting back-tested results on a public website, where anyone can view them, is exactly the scenario that tripped up all five firms. Hypothetical performance isn't banned; it just can't be broadcast indiscriminately.

Form ADV and recordkeeping requirements

The Marketing Rule doesn't operate alone. Two parallel obligations attach to it: Form ADV disclosures and expanded recordkeeping under Rule 204-2.

Form ADV Part 1 includes a marketing rule section where advisers must report whether they use testimonials, endorsements, third-party ratings, and certain performance advertising. Part 2A must accurately describe the firm's marketing practices. Examiners cross-reference both when reviewing advertising materials, so outdated or incomplete ADV disclosures create a separate compliance gap even if the advertisements themselves are clean.

On recordkeeping, the Books and Records Rule requires advisers to retain all advertisements, including drafts that were distributed, for five years from the date of last use, with the first two years kept in an easily accessible place. The updated rule also expanded what counts as a required record, pulling in documentation related to performance calculations, promoter agreements, due diligence on third-party ratings, and evidence supporting any material claims in an advertisement.

In practice, the record for a single advertisement may include the final version, reviewer notes, the underlying performance data, any promoter disclosures, and evidence that required disclosures were present. Firms that treat recordkeeping as an afterthought tend to find the gap only when an examiner asks for documentation they don't have, which is one reason more firms are moving toward a system of action for compliance.

What happens when advisers get it wrong: enforcement patterns

Enforcement under the Marketing Rule has moved through identifiable phases. Early actions focused on hypothetical performance. By late 2025, the Division of Examinations had shifted focus to testimonials, endorsements, and third-party ratings, issuing a Risk Alert in December 2025 that put those provisions at the center of 2026 exam priorities.

The December 2025 Risk Alert identified specific populations that should expect heightened scrutiny:

• Advisers changing firms or launching new ones, who may carry over marketing materials without re-vetting disclosures
• Digital-first advisers and heavy social media users
• Firms with influencer partnerships or referral networks, including broker-dealers running distributed sales teams
• Firms running distributed marketing, such as branch advisers posting independently or wholesalers presenting at conferences

The thread connecting these groups is documentation. Examiners want to see that advisers conducted upfront due diligence, caught conflicts proactively, and maintained records showing review happened before materials went out. Firms that treat disclosure as a checkbox tend to surface gaps under exam conditions that a documented workflow would have caught.

SEC staff guidance and FAQ updates through 2026

The rule text is fixed, but the SEC staff's interpretation of it keeps moving. The Division of Investment Management maintains a Marketing Rule FAQ document that was most recently updated Jan. 15, 2026, and its history is worth understanding before you build compliance workflows around any single reading of it.

In March 2025, staff reversed prior guidance on extracted performance and portfolio characteristics, a direct signal that positions taken in earlier FAQs are not permanent. The January 2026 update added guidance on model fees in performance calculations and clarified that final orders from self-regulatory organizations can trigger testimonial disqualification provisions.

Staff guidance carries real weight in exam settings, but it can change. Firms that hard-coded earlier FAQ positions into their review checklists had to revisit their procedures after the March 2025 reversal. Building flexibility into your compliance program, instead of treating any FAQ answer as settled law, is the more defensible posture.

Building a marketing compliance program under the rule

A functional marketing compliance program under the rule has five core components, best run on a compliance operating system rather than disconnected point solutions. Miss one and the others don't fully hold up under exam conditions.

Written policies and procedures

Your policies need to reflect what your firm actually does. A firm running a YouTube channel has different review requirements than one that only distributes quarterly newsletters. Policies should specify which content types require pre-approval, who is authorized to approve them, and how testimonials, endorsements, and performance materials are handled separately from general advertising.

Pre-approval workflow

Every advertisement should clear a defined review process before distribution. That means a named reviewer, a documented approval, and a record of what was approved and when. For firms with multiple content creators or branch advisers posting independently, the workflow needs to account for distributed production, beyond centralized publishing alone.

Recordkeeping

Build your records at the time of review, not after the fact. For each advertisement, retain the final version, reviewer notes, supporting data for any performance figures, promoter agreements, and evidence that required disclosures were present. Five years from last use is the retention floor, with the first two years readily accessible.

Training

Advisers and marketing staff need to understand the rule's requirements well enough to flag problems before materials reach the reviewer. Annual training on the general prohibitions, testimonial conditions, and performance requirements reduces the volume of non-compliant drafts entering the review queue.

Annual review

Review your policies at least once a year against current SEC staff guidance. Given the March 2025 FAQ reversal on extracted performance, a compliance program that hasn't been revisited since early 2025 may still rely on the pre-2025 extracted-performance guidance that staff reversed, a specific position that is no longer defensible in an exam setting.

How Greenboard supports SEC marketing rule compliance

Each component of SEC marketing rule compliance requires the same things from a tech standpoint: a documented workflow, a review record, and an audit trail that holds up in an exam. That's where Greenboard's marketing compliance module connects directly to exam-ready practice.

Greenboard's AI pre-checks ads, social posts, decks, and video files against the SEC Marketing Rule and any custom firm rules your CCO configures. When something gets flagged, it explains which rule was triggered and why, then suggests alternative language. Required disclosures are verified automatically. By the time a review is complete, the compliance work has already been done — issues caught, disclosures confirmed, and a full audit log created.

Root Financial Partners, a content-led RIA publishing across YouTube, Instagram, LinkedIn, and a blog, estimates saving roughly 24 hours per week on marketing review using Greenboard, while processing 15 or more weekly content reviews with same-day turnaround on high-priority materials.

Root Financial Partners is a Greenboard customer. This reference reflects their reported experience and does not constitute an endorsement.

Every review action creates a 17a-4 and WORM compliant log: what was submitted, who reviewed it, what was flagged, and what was approved. When an examiner asks for documentation showing that review happened before materials went out, that record exists and is retrievable. Firms that build their review workflows in Greenboard don't have to reconstruct audit trails after the fact.

Final thoughts on marketing compliance for SEC-registered advisers

The SEC marketing rule rewards advisers who treat compliance as a workflow, not an afterthought. Your review process, your records, and your ADV disclosures all need to tell the same story. Build that documentation habit now, and you have a lot less to worry about when exam season comes around.

FAQ

What are the seven general prohibitions under the SEC marketing rule?

The SEC marketing rule bars advisers from making untrue statements of material fact, misleading omissions, unsubstantiated claims, cherry-picked performance results, unbalanced presentations of benefits without risk disclosures, misleading references to SEC registration, and any other fraudulent or deceptive practice. These apply to every advertisement regardless of channel or audience. SEC exam observations since the rule took effect have flagged cherry-picked performance and missing risk disclosures most frequently.

Can I use client testimonials and third-party ratings in investment adviser advertising under the SEC marketing rule?

Yes, but each has specific conditions attached. Testimonials and endorsements require a written promoter agreement, disclosure of client status, and disclosure of any compensation or conflicts; third-party ratings require due diligence on the methodology and disclosure of the date, period covered, and any compensation paid. The SEC's December 2025 Risk Alert identified both areas as active exam priorities, so any firm using awards, rankings, or client reviews should audit those materials now.

Should I use back-tested performance on my public website as an investment adviser?

No. The SEC marketing rule requires that hypothetical performance be relevant to the likely financial situation and investment objectives of the intended audience, with supporting information and a clear explanation of limitations available to recipients. Posting back-tested results on a public website where anyone can view them is the specific scenario that led to SEC enforcement actions against five registered investment advisers in April 2024, resulting in $200,000 in combined penalties.

How do I build a defensible recordkeeping system for SEC marketing rule compliance?

Build the record at the time of review, not after the fact. For each advertisement, retain the final version, reviewer notes, supporting data for any performance figures, promoter agreements, and evidence that required disclosures were present. The retention floor is five years from last use, with the first two years kept in an easily accessible place. Firms that reconstruct audit trails after an examiner asks tend to find gaps that a documented review workflow would have caught before the exam.

How do I keep my SEC marketing rule compliance program current as SEC staff guidance changes?

Review your written policies and procedures against current SEC staff guidance at least once a year, and treat FAQ positions as working interpretations, not settled law. The SEC Division of Investment Management reversed prior guidance on extracted performance in March 2025, which required firms that had hard-coded earlier FAQ positions into their checklists to revisit their procedures. Building flexibility into your review process is the more defensible posture when staff interpretation changes.