Testimonials, endorsements and third-party ratings under the Marketing Rule

Since the Marketing Rule took full effect on 4 November 2022, an SEC-registered adviser may use testimonials, endorsements and third-party ratings in its advertising, but only on conditions. Testimonials and endorsements need specific disclosures, oversight, a written agreement when the promoter is paid, and a check that the promoter is not disqualified. Third-party ratings need diligence on how the rating was produced and disclosures about it.

The rule is Rule 206(4)-1 under the Investment Advisers Act, adopted in December 2020 in Release IA-5653 (86 FR 13024, 5 March 2021). It replaced the old advertising rule, which effectively banned testimonials, and the old cash solicitation rule, Rule 206(4)-3, which was removed. Paying someone to refer clients is now governed by the same provisions as paying someone to praise you.

The three terms

The definitions are in Rule 206(4)-1(e), and the difference between the first two is simply who is speaking.

• Testimonial (e)(17): a statement by a current client, or a current investor in a private fund the adviser advises, about their experience with the adviser or its supervised persons, or that solicits or refers someone to become a client or investor.
• Endorsement (e)(5): the same kind of statement by anyone else. That includes former clients, friends, other professionals, bloggers, social media influencers, lead-generation firms and referral networks. A statement that indicates approval, support or recommendation of the adviser counts.
• Third-party rating (e)(18): a rating or ranking of the adviser by a person who is not a related person (as defined in the Form ADV Glossary) and who provides ratings or rankings in the ordinary course of its business.

Referral activity is caught directly. A person who solicits or refers clients to the adviser is giving a testimonial or endorsement even if they never say anything about the adviser's quality. The adopting release notes that a list of clients that does no more than identify them is not a testimonial.

When the rule applies

Rule 206(4)-1(b) applies in two situations:

1. The testimonial or endorsement appears in an advertisement. An adviser's website, brochure, pitch book or social media page that quotes a client is an advertisement carrying a testimonial, whether or not anyone was paid.
2. The adviser compensates someone, directly or indirectly, for a testimonial or endorsement. Under the second prong of the definition of advertisement in (e)(1)(ii), any compensated testimonial or endorsement is itself an advertisement, whether oral or written and whether made to one person or many. The adopting release reads compensation broadly: flat or percentage fees, reduced fees and fee waivers, directed brokerage, prizes, gifts and entertainment. Regular salary and bonuses paid to the adviser's own staff for their ordinary work are not counted.

The rule applies to advisers registered or required to be registered with the SEC. State-registered advisers are subject to their state's advertising rules instead, which may not match the federal rule, so check your state before relying on anything here.

The required disclosures

Rule 206(4)-1(b)(1) requires the adviser to make the disclosures, or to reasonably believe the promoter makes them, at the time the testimonial or endorsement is disseminated. These apply to uncompensated testimonials and endorsements as well as paid ones.

Clearly and prominently:

• that the statement was given by a current client or investor (a testimonial), or by someone who is not (an endorsement)
• that cash or non-cash compensation was provided, if it was
• a brief statement of any material conflicts of interest arising from the promoter's relationship with the adviser

In addition, though not subject to the clear and prominent standard:

• the material terms of any compensation arrangement, including a description of what is paid or to be paid
• a description of any material conflicts of interest arising from the relationship or the compensation

"Clear and prominent" has a specific meaning. The adopting release says the disclosures must be included within the testimonial or endorsement and be at least as prominent as it, and that a hyperlink to the disclosures does not meet the standard. For compensation terms, the release says that if a specific amount is paid, the advertisement should disclose it, and if the payment is a percentage of the advisory fee over a period of time, it should disclose the percentage and the period.

Oversight and the written agreement

Under Rule 206(4)-1(b)(2), the adviser must have:

• a reasonable basis for believing that each testimonial or endorsement complies with the rule. The adopting release gives an example: an adviser using a blogger or influencer can give them the required disclosures and confirm they appear on the promoter's pages, and can write the obligation into the agreement.
• a written agreement with any person giving a testimonial or endorsement, describing the scope of the agreed activities and the terms of compensation.

Disqualified promoters

Rule 206(4)-1(b)(3) prohibits compensating a person for a testimonial or endorsement if the adviser knows, or in the exercise of reasonable care should know, that the person is an ineligible person when the testimonial or endorsement is disseminated.

An ineligible person is someone subject to a disqualifying Commission action (an order barring, suspending or prohibiting them from acting in any capacity under the federal securities laws) or a disqualifying event within the previous ten years. Disqualifying events, listed in (e)(4), include certain criminal convictions, final orders of the kinds described in Section 203(e)(9) of the Advisers Act (which reach state securities regulators, the CFTC and self-regulatory organizations), certain injunctions, and Commission cease-and-desist orders for scienter-based fraud or Securities Act Section 5 violations. Ineligibility extends to the person's employees, officers and directors acting within the scope of their association, and to general partners and elected managers.

The staff's Marketing Compliance FAQ, updated 15 January 2026, adds a position on self-regulatory organization orders: the staff would not recommend enforcement action where the only disqualifying event is an SRO final order that did not expel, suspend or bar the person, the person is complying with it, and for ten years each advertisement with the testimonial or endorsement discloses the order and links to it. That is staff guidance, not the rule.

The exemptions in (b)(4)

De minimis compensation is defined in (e)(2) as a total of $1,000 or less, or the equivalent in non-cash compensation, paid to the person during the preceding 12 months. It is a running total, not a per-payment limit.

Third-party ratings

Rule 206(4)-1(c) allows a third-party rating in an advertisement only if the adviser:

1. has a reasonable basis for believing that any questionnaire or survey used to prepare the rating was structured to make it equally easy to give favorable and unfavorable responses, and was not designed to produce a predetermined result; and
2. clearly and prominently discloses, or reasonably believes the rating discloses, the date the rating was given and the period it was based on, the identity of the third party that created and tabulated it, and, if applicable, that the adviser paid directly or indirectly in connection with obtaining or using it.

Payment is broader than buying the award. It covers fees to be considered, fees to use the logo or reprints, and payments for featured placement.

The general prohibitions apply on top. The adopting release says an advertisement would be misleading if it indicates the adviser is rated highly without disclosing that the rating is based solely on a criterion, such as assets under management, that may not relate to the quality of the advice.

The records to keep

Rule 204-2 requires, among other things:

• (a)(11)(i): a copy of each advertisement. For compensated oral testimonials and endorsements, the adviser may instead keep a record of the disclosures given.
• (a)(11)(ii): a copy of any questionnaire or survey used to prepare a third-party rating in an advertisement, if the adviser obtains one.
• (a)(15)(i): a record of the disclosures, if they were not in the advertisement itself.
• (a)(15)(ii): documentation substantiating the adviser's reasonable basis for believing each testimonial, endorsement and third-party rating complies.
• (a)(15)(iii): the names of affiliated personnel relied on under the (b)(4)(ii) exemption.

Advertisements are kept for five years from the end of the fiscal year in which the adviser last disseminated them, the first two in an appropriate office of the adviser, under Rule 204-2(e)(3). The other records follow the general five-year period in (e)(1).

Form ADV Part 1A, Item 5.L asks whether your advertisements include testimonials, endorsements or third-party ratings, and whether you pay in connection with them. The answers should match what is actually on your website.

What enforcement has looked like

On 9 September 2024 the SEC announced settled charges against nine advisers under the Marketing Rule, with combined civil penalties of $1,240,000 (Press Release 2024-121). According to the orders, one firm advertised two "testimonials" that did not come from current clients and used paid endorsers, without disclosing that they were paid non-clients, in videos and on social media. Four firms showed third-party ratings, some more than five years old, without the date of the rating or the period it covered. The firms settled without admitting or denying the findings.

What examiners look for

The Division of Examinations' Risk Alert of 16 December 2025 is devoted to these provisions. The staff observed:

• testimonials and endorsements with no disclosures at the time of dissemination, often on websites, including "d/b/a" websites of supervised persons
• disclosures behind a hyperlink, or in a smaller or lighter font
• client reviews copied from third-party sites onto the adviser's site without saying they came from clients, and gift cards given to clients for writing reviews
• compensation described generically, without the actual terms
• refer-a-friend programs, influencers, lead-generation firms and referral networks that the adviser had not recognized as endorsements
• no written agreement, or one that did not describe the activities or the compensation, and promoters paid less than $1,000 each time but more than $1,000 over 12 months
• paid promoters with state disciplinary histories that made them ineligible
• rating logos that did not identify who gave the rating, award years listed that the adviser had not won, and undisclosed payments for ratings

Common questions

Can financial advisors use client testimonials?

Yes, if they are registered with the SEC and comply with Rule 206(4)-1(b). Every testimonial in an advertisement needs the clear and prominent disclosures, and a paid one also needs a written agreement (unless the pay is de minimis) and a disqualification check. State-registered advisers should check their state's rules.

Are Google or Yelp reviews testimonials?

A review by a current client is a testimonial in substance. Whether the adviser is responsible for it depends on whether the adviser adopted it or was involved in preparing it. Quoting reviews on your own site, or paying or rewarding clients for writing them, brings them into the rule.

Do I need a written agreement for a refer-a-friend program?

Only if total compensation to a person exceeds $1,000 in the preceding 12 months. Below that, the disclosures are still required.

Can I put an award logo on my website?

Only with the (c) conditions met: a reasonable basis about the survey behind it, and clear and prominent disclosure of the date and period, the rating's source, and any payment. A logo alone does not do that.

Is a former client's review a testimonial or an endorsement?

An endorsement. A testimonial must come from a current client or investor, and the disclosure must say which it is.

Keep the file as you go

Luna's marketing review reviews each advertisement against the Marketing Rule and your firm's disclosure rules before it goes out, with each finding located in the piece, and keeps what was submitted and the CCO's decision as the record. The marketing policy template covers promoter agreements and disqualification checks. For posts and influencers, see social media compliance for advisers, and for track records, performance advertising under the Marketing Rule.