Whether you’re preparing to hire a financial advisor or currently working with one, you’re likely to see more frequent ratings and reviews of financial advisors now that the SEC permits advisors to ask their clients to write reviews. While online reviews can be a useful tool to evaluate professionals in any industry, it’s important to consider many factors and weigh their relative importance based on your individual needs and expectations.

Using Reviews to Evaluate a Financial Advisor 

When you’re evaluating a financial advisor, you’ll want to understand the services they offer, how they’re compensated, any financial certifications they hold, and their background and industry experience. You may also prefer a financial advisor who will work with you online or who specializes in working with clients with similar needs or interests to your own.

With so many factors to consider, reviews from current or past clients of financial advisors can certainly offer a lens into the experience of others, which may prove valuable in your evaluation. 

But you should ask yourself the following questions before deciding how much importance to place on a financial advisor review:

• Is the review from a client of the advisor or a non-client?
• Is the content in their review relevant?
• Did the reviewer get compensated to write their review?
• What biases might the reviewer have that I should consider?
• Does the review sound too good to be true?

If you can’t answer these questions because the required disclosures aren’t accompanying the review, this may be a red flag indicating the advisor may not be in compliance with the SEC Marketing Rule. Also, you should expect that the financial advisors you speak with are prepared to discuss reviews you’ve read and ready to help clarify any questions you have after reading their online reviews.

Writing a Review for a Financial Advisor 

If you currently work with a financial advisor or have worked with one in the past, writing an online review could help other people learn from your experience. Or, if you’re not a client of a financial advisor but you know him or her well, your perspective on their trustworthiness, experience, and other qualities can still prove quite valuable.

It may be several months before your own financial advisor (or financial advisor acquaintance) reaches out to ask if you’ll leave them a review. Also, many financial advisors may choose not to proactively ask for reviews or prefer to wait even longer before deciding to ask for reviews.

If you do decide to write a financial advisor review, you’ll want to put yourself in the shoes of someone reading your review and also think about what you personally would find most useful to craft a thoughtful review that is fair and balanced. 

You can easily find reviews online to help you evaluate doctors and lawyers, but when it comes to choosing a financial advisor, you’ve been mostly out of luck. In fact, the US government has made it difficult for Americans to evaluate financial advisors based on reviews from their clients dating back to 1961. Until now.

Fortunately, a new rule announced by the Securities and Exchange Commission (SEC) on December 22, 2020, and effective May 4, 2021, means both financial advisors and directory websites that help consumers search for a financial advisor can collect and display advisor reviews. This is an important factor worth considering when choosing who to hire to manage your investments and life savings. 

A Brief History of Financial Advisor Reviews

In 1961, the year John F. Kennedy became president of the United States, the SEC issued a rule prohibiting financial advisors from including client reviews when advertising their services. The rule concluded that an advertisement featuring a client review (referred to by the SEC as a ‘testimonial’) would “constitute a fraudulent, deceptive, or manipulative act, practice or course of business.” 

Of course, the SEC deserves credit for the important role it plays in protecting consumers from harm through its oversight of the financial services industry. And the prohibition of testimonials has certainly alleviated SEC concerns of financial advisors cherry-picking 5-star reviews to promote their investment advisory services while burying 1-star reviews.

But this prohibition effectively silenced the voices of millions to a whisper over the past six decades, whose opinions of their financial advisors were limited to cocktail parties while online reviews of professionals in other industries proliferated.

In 2019, the SEC acknowledged their 60-year-old rule was doing consumers a disservice by not providing an opportunity for people to evaluate a financial advisor based on reviews as one factor in their hiring decision; in the same manner, people research other professionals like doctors and lawyers online (not to mention mechanics, plumbers, and babysitters).

Introducing the SEC Marketing Rule

First proposed in 2019, the SEC collected more than 90 comment letters from industry stakeholders and feedback forms from individual investors, which helped shape its new Marketing Rule, which was announced on December 22, 2020.

The SEC Marketing Rule was officially published in the Federal Register on March 5, 2021, and became effective on May 4, 2021.

Once the new rule became effective, the SEC granted an 18-month transition period before advertisements were required to comply with the new marketing rule.

What is the SEC Marketing Rule?

The SEC Marketing Rule allows financial advisors to provide investors with useful information to help them evaluate and choose investment advisers and advisory services, subject to conditions stipulated by the Securities and Exchange Commission (SEC) designed to prevent fraud.

In a press release issued on December 22, 2020, announcing its modernized marketing rule for financial advisors, the SEC acknowledged that technology and consumer expectations have changed dramatically since its decades-old advertising rule took effect. 

According to SEC Chairman Jay Clayton, “The marketing rule reflects important updates to the traditional advertising and solicitation regimes, which have not been amended for decades, despite our evolving financial markets and technology.” He goes on to say the new rule “recognizes the increasing use of electronic media and mobile communications and will serve to improve the quality of information available to investors.”

While the SEC Marketing Rule removes the severe limitations on financial advisor reviews, the SEC maintains its important role in protecting consumers by requiring disclosures and conditions that must be met to ensure reviews are presented in a fair and balanced manner.

(It’s important to note that the SEC Marketing Rule is hundreds of pages in length and covers multiple related topics, while this briefing is specifically focused on discussing its implications for financial advisor reviews and ratings.)

Financial Advisor Reviews: Disclosure and Oversight Requirements

Financial advisors who choose to include client reviews in their advertising under the new rule need to work closely with their compliance officers to ensure they satisfy the SEC’s new disclosure and oversight requirements. And consumers benefit from an understanding of the protections set forth by the SEC when reading (or writing) a review for a financial advisor.

Key SEC expectations for advertisements featuring financial advisor reviews include:

• Clear and prominent disclosure indicating:
  • If a review is from a client or non-client
  • Whether or not the reviewer was compensated
  • How the reviewer was compensated (in cash or otherwise)
  • Any conflicts of interest (including a description of conflicts)
• A written agreement must be in place between a financial advisor and reviewer (unless the reviewer receives less than $1,000 for their review in cash or otherwise within a 12-month period)

With more than 300,000 financial advisors and planners in the US, how do you find the right financial professional for you? This Wealthtender financial advisor directory will help you discover financial advisors based and planners based on the factors most important to you. Use the directory to search by location, areas of specialization, or professional certifications.

We believe everyone deserves help with money matters from someone they can trust, no matter their income or stage of life. Here are a number of ways Wealthtender helps people every day find the right financial advisors and resources for their individual needs.

1️⃣ Looking for a Financial Advisor? It’s Time to “Unzip”

For many people who are thinking about hiring a financial advisor, the first question they’re likely to be asked on other websites is to enter their zip code. We believe that’s antiquated. Here’s why:

✅ The US Postal Service invented zip codes in 1963 to more efficiently route our mail, not to help people choose a financial advisor. 

✅ Where someone lives should be a factor when choosing a financial advisor, not necessarily the primary factor.

✅ People deserve to work with the best financial advisor for their individual needs, even if they live hundreds of miles away.

The best financial advisor for many people might live 600 miles away. And that’s OK! They don’t need to limit their search to a local zip code. With Wealthtender, everyone can start by prioritizing their most important needs and discover advisors who specialize in helping people just like them. As a result, they can feel more confident the advisor they hire is their perfect match whether they live down the street or across the country.

You’ll find many financial advisors and planners on Wealthtender who work with clients nationwide.

2️⃣ We Don’t Sell Your Personal Information

When people look for a financial advisor on websites like Smart Asset, they’re asked to fill out a form with personal information about their income and savings. When they submit the form, this information is immediately sold to 3 financial advisors who will start calling and emailing right away in the hopes of winning the business.

Wealthtender is different. We believe everyone deserves better.

When people find financial advisors and coaches on Wealthtender they think may be a good fit, they can easily contact them through a button on their Wealthtender profile page or book an introductory call.

And if people don’t find their perfect financial advisor on Wealthtender, they can let us know and we’ll do our best to suggest ideas they can consider to find an advisor or coach who may not be on Wealthtender yet.

3️⃣ Wealthtender is as Easy to Use as Netflix

Finding a financial advisor may not be as fun as choosing a movie to watch on Netflix, but Wealthtender makes it just as easy.

Throughout our website, visitors can easily scroll up and down to view different categories of advisors, then swipe left or right to learn more about advisors and their areas of specialization within each category. Categories include occupations and industries, age and life stage, advisor credentials, types of investing, culture, religion, ethnicity, and more.

We empower people to find an advisor based on what’s most important for their unique circumstances and individual needs.

4️⃣ You’ll Find Lots of Certified Financial Planners on Wealthtender

Wealthtender encourages people to hire financial advisors who demonstrate their commitment to advanced education and who always put the best interests of their clients first.

The Certified Financial Planner (CFP) designation is considered one of the most distinguished credentials an advisor can earn. Our guide to CFP professionals educates people on the benefits of hiring a CFP and showcases CFPs with offices around the country and various areas of specialization.

5️⃣ You’ll Also Find Financial Advisors and Coaches with Additional Credentials

Beyond the CFP designation, Wealthtender features a series of articles and guides about more than 20 professional credentials popular among financial advisors and coaches.

Depending upon the unique needs of visitors to our site, they may find it more beneficial to choose an advisor or coach with a specialist designation that demonstrates their knowledge in an area of particular interest.

6️⃣ We Help People Save Money When Hiring a Financial Advisor

In recent years, the cost of hiring a financial advisor has generally improved as the industry adopted a fiduciary mindset and moved to a more transparent pricing structure. And most people aren’t aware that many advisors now offer alternative ways to pay like flat fees and hourly rates that could be much cheaper than paying a percentage of assets under management.

Wealthtender helps people understand the different ways they can pay a financial advisor with guides showcasing advisors who offer more affordable payment options to their clients.

7️⃣ Visitors to wealthtender.com Can Find Advisors Who Live Near Them

While we encourage people to find the best financial advisor for their unique needs, even if they live far away, we know many people prefer to work with someone they can meet in person and who lives nearby.

Wealthtender is growing quickly and visitors to wealthtender.com are likely to find financial advisors on Wealthtender who live in their community.

8️⃣ Everyone Deserves to Read Honest Reviews of Financial Advisors Before Hiring One

You can easily find reviews online to help you evaluate doctors and lawyers, but when it comes to choosing a financial advisor, you’re mostly out of luck. Fortunately, this is changing.

Thanks to a new Securities and Exchange Commission (SEC) rule that became effective in 2021, financial advisors are now permitted to invite their clients to write online reviews. By sharing their own experiences, clients and acquaintances of advisors can help other people make more informed and educated hiring decisions.

The SEC wants to ensure online reviews of financial advisors include important information such as whether or not the reviewer was compensated, if the reviewer is a client or not, and any significant conflicts of interest.

Wealthtender is the first financial advisor online review platform designed to comply with the new SEC rule. You can read our press release here announcing the launch of Certified Advisor Reviews.

We look forward to helping people read honest reviews of financial advisors in 2022 as the industry completes the SEC’s required prerequisites currently underway.

9️⃣ Many People Don’t Need a Financial Advisor or Coach

We understand what our competitors don’t: Not everyone needs a financial advisor. Some people may be better served working with a financial coach. Others may prefer a DIY approach to managing their money with the help of personal finance blogs, podcasts, their creators, and communities.

And that’s why we’re proud to be building a community of financial professionals and educators who collectively can offer the education and solutions people need to be smarter with their money. Working together, we can help people find the resources best for their needs, not ours.

We’re Here for You

If you need additional help finding the right financial advisor or planner for you, or if you have questions for us, please email yourfriends@wealthtender.com.

There are many financial advisors and planners not yet featured on Wealthtender, so if you can’t find the right financial professional on Wealthtender today, let us know and we’ll do our best to help suggest resources you might consider to continue your search.

Wealthtender is proud to be part of a growing community of personal finance professionals and educators dedicated to helping people enjoy life more with less money stress. If you are a financial advisor or planner interested in joining our network, please visit this page to learn more.

Wealthtender helps financial advisors and wealth management firms get more clients online with impactful digital marketing services for a low monthly cost. Learn more and get started in less than 5 minutes by clicking the big red button.