Study guide
17.1 Advertising Rules
Series 65 Uniform Investment Adviser Law
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1 Introduction
About the Series 65 How to Use This Guide
2 Chapter 1: Economic Factors & Business Cycles
1.1 Business Cycles 1.2 Monetary Policy 1.3 Fiscal Policy 1.4 Inflation & Deflation 1.5 Interest Rates & Yield Curves 1.6 Global Economic Factors
3 Chapter 2: Financial Reporting & Analytical Methods
2.1 Financial Statements Overview 2.2 Accounting Fundamentals 2.3 SEC Filings & Annual Reports 2.4 Financial Ratios 2.5 Time Value of Money 2.6 IRR and NPV 2.7 Descriptive Statistics
4 Chapter 3: Types of Risk
3.1 Systematic (Market) Risk 3.2 Unsystematic (Company-Specific) Risk 3.3 Interest Rate & Reinvestment Risk 3.4 Inflation & Currency Risk 3.5 Liquidity Risk & Opportunity Cost 3.6 Risk Measurement & Portfolio Theory
5 Chapter 4: Cash Equivalents & Fixed Income Securities
4.1 Cash & Cash Equivalents 4.2 Treasury Securities 4.3 Agency Securities 4.4 Corporate Bonds 4.5 Municipal Bonds 4.6 Bond Pricing & Yields
6 Chapter 5: Equity Securities
5.1 Common Stock 5.2 Preferred Stock 5.3 Shareholder Rights & Corporate Actions 5.4 Equity Valuation Methods 5.5 ADRs, REITs & Other Equity Securities
7 Chapter 6: Pooled Investments
6.1 Mutual Funds 6.2 Mutual Fund Costs & Fees 6.3 Exchange-Traded Funds (ETFs) 6.4 Closed-End Funds & UITs 6.5 Hedge Funds & Private Equity
8 Chapter 7: Derivatives, Alternative Investments & Insurance Products
7.1 Options Basics 7.2 Options Strategies 7.3 Alternative Investments 7.4 Annuities 7.5 Life Insurance Products
9 Chapter 8: Client Types & Profiles
8.1 Individual Clients 8.2 Business Entity Clients 8.3 Trusts & Estates 8.4 Accredited & Qualified Investors 8.5 Suitability & Know Your Customer
10 Chapter 9: Portfolio Theory & Capital Markets
9.1 Modern Portfolio Theory 9.2 Capital Asset Pricing Model (CAPM) 9.3 Efficient Market Hypothesis 9.4 Risk & Performance Measures 9.5 Asset Allocation
11 Chapter 10: Portfolio Management Strategies
10.1 Investment Styles 10.2 Portfolio Management Techniques 10.3 Fixed Income Strategies 10.4 Return Calculations
12 Chapter 11: Tax Considerations & Retirement Planning
11.1 Capital Gains & Investment Taxes 11.2 Retirement Plans Overview 11.3 Individual Retirement Accounts (IRAs) 11.4 Education Savings Plans 11.5 Distributions & RMDs
13 Chapter 12: ERISA, Special Accounts & Performance Measures
12.1 ERISA Requirements 12.2 Special Account Types 12.3 Performance Measures & Reporting 12.4 QDROs & Special Situations
14 Chapter 13: Regulation of Investment Advisers
13.1 Investment Advisers Act of 1940 13.2 Registration Requirements 13.3 Recordkeeping Requirements 13.4 Custody Requirements 13.5 Exempt Reporting Advisers
15 Chapter 14: Regulation of Investment Adviser Representatives
14.1 IAR Definition & Requirements 14.2 Registration & Post-Registration 14.3 IARs of Federal Covered Advisers
16 Chapter 15: Regulation of Broker-Dealers & Agents
15.1 Broker-Dealer Definition 15.2 Agent Registration 15.3 Regulation Best Interest
17 Chapter 16: Securities Registration & Exemptions
16.1 Uniform Securities Act 16.2 Securities Registration Methods 16.3 Exempt Securities 16.4 Exempt Transactions
18 Chapter 17: Communications & Client Relationships
17.1 Advertising Rules 17.2 Social Media & Electronic Communications 17.3 Client Agreements & Disclosure 17.4 Proxy Voting & Other Obligations
19 Chapter 18: Ethics & Fiduciary Obligations
18.1 Fiduciary Duties 18.2 Prohibited Practices 18.3 Senior & Vulnerable Adult Protection 18.4 AML & Compliance Programs
17.1 Advertising Rules
Key Takeaways Explain This Topic AI
The Marketing Rule modernized adviser advertising requirements.
Testimonials and endorsements are permitted with required disclosures.
Performance must be shown net of fees; gross only with net.
Hypothetical performance has strict limitations.
Advertisements and supporting records must be retained for five years.
Last updated: December 2025
Advertising Rules for Investment Advisers
Investment advisers must follow strict rules regarding advertising to ensure communications are fair, accurate, and not misleading. The SEC's Marketing Rule fundamentally changed the advertising landscape for investment advisers.
SEC Marketing Rule (Rule 206(4)-1)
The SEC adopted a comprehensive new marketing rule in December 2020, with mandatory compliance beginning November 4, 2022. This rule consolidated previous advertising and solicitation rules into a single framework.
Definition of Advertisement
An "advertisement" includes:
Traditional Marketing : Any communication disseminated by any means to more than one person that offers advisory services
Compensated Testimonials/Endorsements : Any testimonial or endorsement for which an adviser provides compensation
General Prohibitions
- Prohibited Conduct Description
- Material Misstatements Untrue statements of material fact
- Material Omissions Leaving out facts necessary to prevent misleading
- Misleading Statements Statements likely to deceive or mislead
- Unsubstantiated Claims Statements without reasonable basis
- Cherry-Picking Selectively presenting favorable results
- Misleading Implications Making statements that imply untrue facts
- Fair/Balanced Failure Not presenting risks alongside benefits
- Testimonials and Endorsements
- Key Definitions
Testimonial : A statement by a current client or private fund investor that:
- Describes their experience with the adviser
- Directly or indirectly solicits new clients
- Refers potential clients to the adviser
Endorsement : A statement by a non-client that indicates:
- Approval or support of the adviser
- Recommendation of the adviser's services
- Description of experience with the adviser
- Required Disclosures
- Disclosure Element Requirement
- Client Status Clearly disclose whether promoter is a current client
- Compensation Disclose if promoter is being compensated (cash or non-cash)
- Conflicts of Interest Disclose material conflicts that could affect credibility
- Written Agreement Required for compensation over $1,000 (de minimis exception)
- Oversight Requirements
Advisers using testimonials/endorsements must:
- Have a reasonable basis to believe disclosures are being made
- Oversee compliance with marketing rule requirements
- Maintain policies and procedures for supervision
- Performance Advertising
- Presentation Requirements
- Performance Type Requirements
- Net Performance Must always be shown; the primary requirement
- Gross Performance Only permitted if net performance is also shown
- Extracted Performance Must include total portfolio performance
- Hypothetical Performance Strict conditions apply
- Hypothetical Performance
Hypothetical performance (model or backtested results) may only be shown to:
- Investors who the adviser reasonably believes can evaluate the methodology
- Must be accompanied by criteria used to generate results
- Cannot imply results represent actual trading
- One-, Five-, and Ten-Year Returns
When showing performance over time periods:
- Must show 1, 5, and 10-year returns (or since inception if shorter)
- All periods must end at a consistent date (typically most recent quarter-end)
- Annualized returns required for periods over one year
- Predecessor Performance
Can be used if:
- Substantially similar strategy and advisory personnel
- Records supporting performance are available
- Clear disclosure of the relationship
- Third-Party Ratings
- Requirements for Using Ratings
- Rating methodology must be disclosed or available
- Date of the rating must be shown
- Questionnaire or survey must have been designed fairly
- Cannot be misleading in presentation
- Recordkeeping Requirements
- Record Type Retention Period
- All advertisements 5 years from last use
- Performance calculation support 5 years
- Third-party rating questionnaires 5 years
- Testimonial/endorsement disclosures 5 years
On the Exam : The SEC Marketing Rule is frequently tested. Know that testimonials are now permitted (a major change from prior rules), but only with proper disclosures. Remember that net performance must always be shown—gross performance alone is prohibited.
- Key Takeaways
- The 2022 Marketing Rule modernized adviser advertising requirements
- Testimonials and endorsements are now permitted with required disclosures
- Performance must be shown net of fees; gross only allowed with net
- Hypothetical performance has strict limitations
- All advertisements must be retained for 5 years