The Department of “No”

The business bottleneck.

There are many unkind names that I’ve heard compliance referred to over the years, but the worst part is that it simply isn’t true. I’ve always been a firm believer that a robust compliance program doesn’t stifle you’re business’s growth but instead amplifies it. At least if you know what you’re doing. A truly robust compliance program not only protects you, it protects your firm, your employees and your clients. Now isn’t that something to be shouting from the rooftops? So, what stops this from being the reality for many firms? Many firms get scared of compliance instead of choosing to invest the time and money necessary to make sure that their compliance is actually sound. This leaves them with stressed CCOs, who are under resourced and unable to keep up with the demands of the regulators. New regulations have been rolled out almost weekly for the last 12 months; that’s a lot to implement and test before compliance deadlines kick in.

Today I wanted specifically to talk about a rule that I think is often painted with the brush of a business bottleneck rather than the opportunity that it is. That is the SEC’s Marketing Rule. So let’s get into it in this month’s issue of A Little Bit Of Leila.

Key Updates In The Last 30 Days:

• April was a quieter month for enforcement from the SEC however, they are still showing a higher level of interest in crypto and digital currencies, hosting several round tables and issuing statements about stablecoins.
• FINRA has been in the process of issuing new rules and amendments as regulation returns to normal after a level of disruption earlier this year.
• Market activity has been volatile in the last 30 days with many investors becoming anxious.

My Take:

Since the beginning of the stock market, we’ve seen cycles: markets go up, markets go down. In times of uncertainty, it’s essential to shift focus from the cause of short-term disruptions to the consistency of long-term trends. Advisors are not tasked with predicting the next market move. Your true value lies in offering perspective, managing client expectations, and delivering calm, steady leadership when it matters most.

Now is the time to lead with proactive communication. Reach out to clients who may be feeling uneasy. Reiterate the long-term nature of their strategy and caution against impulsive decisions that could derail their progress. And just as critically, protect your professional integrity. Always document client interactions, especially when their decisions deviate from your guidance. A follow-up email can safeguard both your compliance and your reputation.

Volatility is inevitable, but panic doesn’t have to be. When you stay grounded in strategy and communication, you not only reinforce trust—you help your clients weather any market storm with confidence.

Deep Dive Of The Month

Let’s talk a little bit more about the marketing rule. What are the basics that you need to be aware of? If you’re an investment advisor aiming to grow without pouring resources into traditional advertising, the SEC’s Marketing Rule offers a smart path forward. With the updated rule, SEC-registered firms can now leverage client testimonials and third-party endorsements in their marketing—legally and strategically.

This shift opens up powerful opportunities. Testimonials build trust. Endorsements establish credibility. And with 92% of consumers reading online reviews before making a decision, these tools are no longer optional—they’re essential.

But with opportunity comes responsibility. The SEC’s disclosure requirements are strict: you must clearly state whether the person offering a testimonial is a client, whether they were compensated, and any potential conflicts of interest. These disclosures must be easily understood and just as visible as the testimonial itself.

Ready to start? Consider gathering feedback through satisfaction surveys, LinkedIn or Google reviews, or even short video testimonials. Transparency is key. A balanced mix of client feedback goes further in building trust than curated perfection ever could.

Ask Leila

Q: How can I make sure I am putting the right disclosures on my testimonials?

A: The required disclosures are simple. First, you have to disclose the relationship with the person making the testimonial.  Are they a current client, a past client or someone who is not a client? Second, you have to disclose any compensation.  This includes non-cash compensation like discounting or comping services. Finally, you have to discuss any conflicts of interest.  For example, if the testimonial is provided by a current client who happens to be your mom, that should be disclosed.  Love you moms! Don’t forget you have a duty to keep the disclosures up to date, so if circumstances change that require you to change any of the above disclosures, than make sure you are updating them.  A good practice would be to review testimonials on a monthly or quarterly basis to ensure accuracy.

Responsible Entrepreneurs

One of the best ways to keep up to date with everything happening in our industry is by being involved. If the Marketing Rule is one area of your compliance that you want to improve upon this year, then I have some great news. On May 9th, I will be speaking at the NAPFA Spring 2025 National Conference. I will be talking all about navigating the SEC’s Marketing Rule and how you can use compliance to be your business growth driver rather than an area that restricts your growth. For more information about the conference or to buy tickets, go here.

Snapshot

Have you watched the REGULATE THIS! Podcast yet? With SEC exams looming for many in the industry, we thought that Episode 2 might give you some things to think about as we head towards the summer (aka our favourite time to conduct mock exams and do an audit of your compliance program). Watch episode 2 for everything you need to know about SEC exams.