How Financial Advisors Can Compliantly Promote Third-Party Ratings and Awards

Key Takeaways:

• Ratings and awards issued by reputable organizations can boost advisor credibility and client trust
• The SEC Marketing Rule and FINRA Rule 2210 provide guidance advisors must follow to promote awards
• SEC Risk Alerts and enforcement actions reinforce the importance of compliance to avoid monetary fines
• Wealth management firms that earn reputable awards can gain a marketing edge while staying compliant

Earning and promoting third-party ratings and awards can significantly boost the credibility and visibility of financial advisors and wealth management firms. While qualification requirements can vary considerably, awards issued by reputable organizations provide advisors with a competitive edge in attracting and retaining clients.

On the other hand, advisory firms that fail to adhere to the rules and disclosure requirements for promoting awards could face significant fines as regulators ramp up enforcement efforts. Fortunately, whether advisors are subject to SEC and/or FINRA oversight, each regulator has published clear guidance that advisors can follow to promote third-party ratings and awards compliantly.

Understanding the Regulatory Requirements for Third-Party Ratings and Awards

Both the SEC and FINRA provide important guidance that financial advisors must follow when publishing and promoting third-party ratings and awards. Just below, we summarize key provisions from the SEC Marketing Rule and FINRA Rule 2210 that must be followed to satisfy regulatory compliance requirements. This summary is not intended to be comprehensive and advisors should consult with their compliance officer for further guidance on regulatory matters and firm policies and procedures.

SEC Marketing Rule

The Securities and Exchange Commission’s (SEC) Marketing Rule took effect on May 4, 2021, subject to an 18-month transition period. Since the November 2022 transition period deadline, all registered investment advisers (RIAs) and investment adviser representatives (IARs) regulated by the SEC must abide by the SEC Marketing Rule’s provisions when promoting testimonials or third-party ratings/awards.

Q: What does the SEC consider to be a “third-party rating”?

A: The SEC Marketing Rule defines a “third-party rating” as a “rating or ranking of an investment adviser provided by a person who is not a related person* (as defined in the Form ADV Glossary of Terms), and such person provides such ratings or rankings in the ordinary course of its business.”

In its Adopting Release, the SEC goes on to state “This definition is intended to permit advisers to use third-party ratings, subject to conditions, when the ratings are conducted in the ordinary course of business. We continue to believe that the ordinary course of business requirement would largely correspond to persons with the experience to develop and promote ratings based on relevant criteria. It would also distinguish third-party ratings from testimonials and endorsements that resemble third-party ratings, but that are not made by persons who are in the business of providing ratings or rankings. The requirement that the provider not be an adviser’s related person* will avoid the risk that certain affiliations could result in a biased rating.”

* Related Person Definition: From the SEC Marketing Rule Adopting Release: [An adviser’s “related person” is defined in Form ADV’s Glossary of Terms as “any advisory affiliate and any person that is under common control with your firm.” Italicized terms are defined in the Form ADV Glossary. We believe that a rating by a person under common control with the adviser could present the same bias towards the adviser as a rating by an adviser’s other advisory affiliates.]

Q: What must financial advisors consider before proceeding with the publication and promotion of a third-party rating or award?

A: The SEC Marketing Rule introduced a new section of Form ADV (subsection L under Item 5) that requires financial advisors to indicate if they use third-party ratings in advertisements, and if so, whether cash or non-cash compensation is paid in connection with their use. These questions are simply ‘yes’ or ‘no’. Many popular industry awards include a cost for award eligibility and/or a licensing fee to promote the award logo. In these instances, advisors should check both ‘yes’ to their use of third-party ratings and ‘yes’ to the compensation question.

Before accepting and promoting an award, the SEC Marketing Rule also states that financial advisors must perform due diligence to establish “a reasonable basis to believe that any questionnaire or survey used in the preparation of the third-party rating is structured to make it equally easy for a participant to provide favorable and unfavorable responses, and is not designed or prepared to produce any predetermined result.”

Q: How can financial advisors satisfy the third-party rating due diligence requirement (referenced in the answer above)?

A: In its adopting release, the SEC states: “an adviser could satisfy the [due diligence] requirement by accessing the questionnaire or survey that was used in the preparation of the rating.”

The SEC goes on to acknowledge that some third-party rating agencies may be reluctant to share proprietary survey or questionnaire information to advisers, such as their calculation methodology. Accordingly, the SEC suggests a couple of ways financial advisors can satisfy the due diligence requirement, including:

1. Seeking representations from the third-party rating agency regarding general aspects of how the survey or questionnaire is designed, structured, and administered.

2. Accessing information publicly disclosed by a third-party rating provider about its survey or questionnaire methodology.

Through either of the above approaches, the SEC states that financial advisors “could obtain sufficient information to formulate a reasonable belief as required by the due diligence requirement without obtaining proprietary data of third-party rating agencies.”

Q: What disclosures must accompany third-party ratings and awards published and promoted by financial advisors to ensure SEC Marketing Rule compliance?

A: The SEC Marketing Rule requires that a) financial advisors “clearly and prominently disclose”, or b) financial advisors “reasonably believe that the third-party rating issuer clearly and prominently discloses”:

1. The date on which the rating was given and the period of time upon which the rating was based

2. The identity of the third-party that created and tabulated the rating

3. (If applicable) That compensation (cash or non-cash) has been provided directly or indirectly by the financial advisor in connection with obtaining or using the third-party rating

To satisfy the requirement to “clearly and prominently” display disclosures, it’s important to note these disclosures must be displayed alongside or in very close proximity to the published rating/award. Financial advisors cannot link to disclosures on another page to satisfy this requirement.

Q: Can financial advisors that publish third-party ratings with the still be at risk of not meeting all SEC Marketing Rule requirements?

A: Yes. Beyond the disclosures noted above, the SEC Marketing Rule prohibits the publication or promotion of ratings/awards that could be considered false or misleading. Here are a few examples of advertisements featuring ratings/awards that could be considered false or misleading, even if the above disclosures were provided:

• Promoting a rating based on services that a financial advisor no longer provides or has materially changed
• Advertising that a financial advisor is ‘highly rated’ without disclosing that the rating is solely based on a metric like ‘assets under management’
• Promoting an award that was earned based on the qualifications of a financial advisor no longer employed by the firm

FINRA Rule 2210

Financial advisors who are registered representatives of broker-dealers must abide by FINRA Rule 2210 that governs communications with the public, including the use of third-party ratings and awards. Financial advisors who are dually SEC and FINRA registered must abide by all SEC Marketing Rule Requirements, in addition to the regulations prescribed by FINRA Rule 2210. Many of FINRA’s requirements are similar to those found in the SEC Marketing Rule, therefore best practices include establishing a compliance program for third-party ratings and awards designed to satisfy the requirements of both the SEC Marketing Rule and FINRA Rule 2210.

This summary is not intended to be comprehensive and advisors should consult with their Supervisory Principal for further guidance on regulatory matters, including understanding the approval process, recordkeeping requirements and steps to comply with firm policies and procedures.

Q: What provisions of FINRA Rule 2210 are most relevant to the promotion of third-party ratings and awards?

A: It is important for financial advisors to ensure any promotion of third-party ratings and awards meet the Content Standards (General Standards) established in FINRA Rule 2210, including:

• Avoidance of statements or claims that could be considered false, exaggerated, unwarranted, promissory, misleading, or include any untrue statement
• Avoidance of any presentation of a rating or an award that explicitly or implicitly predicts or projects what future performance may be or that past performance will recur
• Considerations regarding the nature of the audience where a rating or award is published, and ensuring relevant details and explanations are audience-appropriate
• Placement of disclosures and details in areas that ensure the audience will understand how this supporting content is relevant to their understanding of the rating/award

Further, financial advisors should be familiar with the requirements related to testimonials as described in the next question just below, both to understand and incorporate the disclosures required for testimonials, and to ensure the third-party rating issuer, when awards concern a technical aspect of investing, “have the knowledge and experience to form a valid opinion” about the subject matter.

Q: What disclosures does FINRA require accompany third-party ratings and awards?

Beyond any disclosures necessary to satisfy the General Standards discussed in the question and answer above, advertisements and communications to a retail audience promoting ratings/reviews must also prominently disclose the name of the advisor and/or their firm, the name of the organization that issued the rating/award, and the nature of the relationship between the advisor and the third-party rating firm.

Additionally, because third-party ratings/awards could be construed as a form of ‘testimonial’, financial advisors should incorporate the disclosure requirements for testimonials outlined in FINRA Rule 2210 as a matter of good practice, including:

• The fact that the rating/award, often assessed with a historical lens, may not be representative of the experience of all past or future customers,
• The fact that the rating/award should not be construed as a guarantee of future performance or success, and
• If more than $100 in value is paid to be considered for the award or to promote the award, the fact that payment was made for the rating/award

Further, financial advisors must ensure that any promotion of ratings/awards are approved by an appropriately qualified Registered Principal before use or filing with FINRA’s Advertising Regulation Department.

SEC Risk Alerts and Enforcement Actions

After the SEC Marketing Rule first took effect in May 2021 and subsequent to the final compliance date established in November 2022, the SEC began issuing “Risk Alerts” to provide financial advisors and wealth management firms with insights into what their examiners we’re seeing in practice. These Risk Alerts provide guidance for firms to follow to reduce their risk of violating the SEC Marketing Rule.

The SEC followed its Risk Alerts with a series of press releases announcing enforcement actions, with sizable fines for firms that failed to properly promote third-party ratings and reviews, often on advisory firm websites, but also in offline advertisements as well. For example, the SEC charged nine firms for publishing advertisements that included unsubstantiated statements or third-party ratings that lacked required disclosures, resulting in combined civil penalties of $1.24 million (with the smallest fine of $60,000 indicating that fines could be steep, even for smaller advisory firms).

↗️ View SEC Marketing Rule Risk Alerts | Enforcement Actions | Press Releases

More recently in Q2 2025, SEC staff has participated in conversations with industry participants, including the National Society of Compliance Professionals, indicating that additional Risk Alerts, and likely enforcement actions, can be expected.

Develop a Plan to Promote Third-Party Ratings and Awards Compliantly

Third-party ratings and awards can be powerful marketing tools for financial advisors and wealth management firms, but their promotion must comply with SEC and FINRA regulations to ensure transparency for consumers and to avoid the potential of sizable monetary fines.

By working in partnership with CCOs and compliance professionals, financial advisors and wealth management firms can ensure they satisfy all necessary regulatory requirements and make the most of industry awards and accolades to build trust, stand apart from other firms online and in their communities, strengthen client retention, and convert a higher percentage of prospects into clients.