News Summary
On March 19, 2025, the SEC updated its Marketing Rule, easing restrictions for investment advisers by allowing them to present performance information without needing to pair it with net-of-fee data. This change aims to clarify compliance guidelines and enhance the advertising process for advisers, ensuring they can effectively communicate with clients while maintaining necessary disclosures.
SEC Eases Marketing Rule for Investment Advisers: What You Need to Know
On March 19, 2025, big changes rolled out from the SEC, bringing some relief to investment advisers who have been grappling with the complexities of the Marketing Rule. The SEC staff issued updated frequently asked questions (FAQs) regarding Rule 206(4)-1 under the Investment Advisers Act of 1940, and these adjustments aim to simplify how advisers present performance information in their advertisements.
What’s New?
The updated FAQs allow investment advisers to showcase extracted performance and certain performance-related characteristics without the headache of displaying corresponding net-of-fee information, provided they meet some specific conditions. This is a significant pivot from the previous guidelines that demanded equal emphasis on both gross and net performance when presented over the same period.
Since the Marketing Rule was introduced back in 2021, advisers have felt some growing pains in navigating what “performance” really meant. There was confusion around whether certain figures like yield, coupon rates, or volatility should be classified under performance metrics at all. This left many in the advisory community feeling frustrated and overwhelmed.
The Importance of Clarity
The latest guidance from the SEC, however, aims to clarify these uncertainties. With the new changes, advisers can now promote their performance-related characteristics and extracted performance on a gross-of-fees basis without necessarily needing to pair it up with net performance information, making the advertising process much smoother.
However, it’s important to note that even with these newfound flexibilities, advisers must keep their advertisements compliant with the newly outlined conditions. This means that while they can display gross performance separately, they must still provide overall net performance disclosures. But worry not, these adjustments are designed to ease compliance burdens, not create new ones. The SEC has assured advisers that they will not take punitive measures against those who follow the new guidelines.
What Does “Equal Prominence” Mean Now?
Previously, “equal prominence” suggested a side-by-side display of gross and net performance. But now, the SEC clarifies that while both should be available for comparison, they don’t have to be right next to each other. For example, advisers can place composite performance information ahead of extracted performance in their marketing materials.
They’ve also broadened the definitions of portfolio or investment characteristics, simplifying how these are distinguished without getting bogged down in whether they should be tagged as performance or non-performance metrics. This will help advisers communicate more effectively with potential clients.
Refreshing Marketing Strategies
With these changes in hand, investment advisers are encouraged to take advantage of the new flexibilities. This could lead to a smoother journey for both advisers and their clients when it comes to understanding investment performance. As the guidance is effective immediately, advisers will need to revisit their advertising materials and policies to ensure they meet the new standards.
The Managed Funds Association was quick to applaud the SEC’s updates, noting that they strike a positive balance between meeting investor needs and aligning with advisers’ practices. Similarly, compliance consultancy Iron Road Partners has indicated that firms will likely need to make some adjustments to their marketing materials to fully leverage the updated performance metrics.
Listening to the Industry
These changes didn’t happen overnight. They follow years of dialogue between the SEC and the advisory community regarding the challenges posed by earlier guidelines. The SEC’s goal is clear: to provide a clearer path for compliance while easing the burdens faced by investment advisers.
Overall, it seems that the SEC’s newly updated Marketing Rule FAQs could play a significant role in streamlining how investment advisers operate. By creating more straightforward guidelines for presenting performance metrics, advisers are in a better position to inform and attract potential investors without getting stuck in compliance quagmires.
Deeper Dive: News & Info About This Topic
HERE Resources
Finding the Right Rhythm: Your Guide to Social Media Posting Frequency in 2025
Exciting Changes: SEC Updates Marketing Rule Guidance for Investment Advisors
The New Age of Law Firms: Embracing Social Media for Better Client Engagement
Shopify’s Comprehensive Marketing Strategies to Boost Ecommerce Sales
Exciting Developments in Digital Marketing and Communications
Exciting Times: Adobe Teams Up with Estée Lauder to Transform Digital Marketing
Preparing for 2025: Essential Changes to Marketing Strategies and Team Dynamics
Unilever’s New Direction: A Shift to Social Media and Influencer Marketing
Unilever Takes a Fresh Approach Under New Leadership
AI Integration in Marketing on the Rise
Additional Resources
- K&L Gates: SEC Updates Marketing Rule FAQs
- Investment News: SEC Unveils Marketing Rule Guidelines
- Private Funds CFO: Navigating the SEC’s Marketing Rule
- Lowenstein: SEC Settles Against Nine Investment Advisers
- National Law Review: Change in Administration
- Wikipedia: Marketing
- Google Search: SEC Marketing Rule
- Google Scholar: SEC Marketing Rule
- Encyclopedia Britannica: Marketing Rule
- Google News: SEC Updates Marketing Rule
