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The SEC said that client reviews do not violate its ban on testimonials as long as they appear on independent social media or review sites. There's an important proviso: all public comments about the advisor, regardless of whether they are positive or negative, must be available for the public to see. It's also important that advisors themselves have no means of controlling how the comments appear on the sites (see Figure 9.2). For example:

Permitted – Testimonials on Yelp, Google, or any so-called advisor review site (such sites deemed as objective).

Not permitted – Testimonials written on an advisor's Facebook fan page (because the advisor controls the page) and LinkedIn recommendations.

It's a good idea for advisors to use social media to direct prospective clients to reviews on objective third-party sites. But advisors need to take care that they direct viewers to pages that display all reviews, both pro and con, and not just a single review.


The 2014 guidance also sought to reduce ambiguity in a few other areas concerning social media compliance.

“Friending” and Connecting – The SEC has made it clear that “friending” someone on Facebook or connecting with someone on LinkedIn is not considered a testimonial or endorsement.

Testimonials on Outside Subjects – Direct testimonials are now permitted if they relate to an advisor's community involvement and not the advisor's financial expertise.

Both Positive and Negatives Reviews on Chase's Yelp Profile

FIGURE 9.2 Both Positive and Negatives Reviews on Chase's Yelp Profile

■ The SEC wrote that it “no longer take(s) the position, as [it] did a number of years ago, that an advertisement that contains non-investment related commentary regarding an IAR, such as regarding an IAR's religious affiliation or community service, may be deemed a testimonial” that violates the rules. It means that advisors may now include their membership in charitable activities, their knowledge about coaching youth soccer teams, and their interest in bicycling as skills that members may endorse on social sites.

■ The SEC guidance aims to allow advisors to connect with clients and prospects more closely by permitting advisors to present a deeper portrait of who they are.

Directing Traffic to Social Sites – Advisors may acknowledge their presence on social media channels in various media.

■ The SEC says, “An investment adviser or IAR could reference the fact that public commentary regarding the investment adviser or IAR may be found on an independent social media site, and may include the logo of the independent social media site on its non-social media advertisements, without implicating the testimonial rule.”

Here's what this means for advisors:

■ Do tell listeners to “Check us out on Facebook” in a radio spot or interview.

■ Do print “Follow us on Twitter to get up-to-date information and learn more about our company” in a direct mail piece.

■ Do not print a specific testimonial in an advertisement or read one particular (and clearly positive) review in an interview.

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