XY Planning’s smaller advisors envy larger firms’ marketing latitude
Most investment advisors look warily at the SEC. But some smaller advisors are envious of an advantage that larger firms registered with the agency have when it comes to advertising.
The Securities and Exchange Commission’s marketing rule allows investment advisors for the first time to use client testimonials, endorsements and reviews on third-party platforms to tout their firms.
The regulation went into force last November. So far, most advisors have been reluctant to post client testimonials because of the uncertainty about how the SEC will enforce the marketing rule.
But there are some advisors who can’t use testimonials even if they want to — those who aren’t registered with the SEC. The agency’s regulations apply to advisors with more than $100 million in assets under management. Advisors with less than $100 million in AUM register at the state level.
The problem for smaller brokers is that their state may not have adopted the SEC marketing rule or a similar regulation, preventing them from using testimonials and client reviews.
“We see a lot of angst from advisors that are frustrated that the federal [SEC] firms get to do this but they can’t do it in their state,” said Michael Kitces, co-founder and executive chairman of the XY Planning Network, a platform for fee-for-service financial planners.
Almost all XYPN advisors are state-registered. Their clients tend to be technologically and social media savvy, Kitces said, which makes them a target audience for online testimonials and reviews.
“It’s frustrating for a lot of [XYPN] members not to be able to show up on the websites or Google reviews and places like that,” Kitces said in an interview earlier this week from an XYPN conference in Atlanta. “That’s the area
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