Best AI for AdvisorsWhat is the SEC Marketing Rule?
Also called: Rule 206(4)-1, Marketing Rule.
Short answer
Rule 206(4)-1 under the Advisers Act, which governs investment adviser advertisements, including AI-written ones.
Definition
The SEC Marketing Rule, Rule 206(4)-1 under the Investment Advisers Act, governs advertisements by SEC-registered investment advisers. It took effect May 4, 2021, and advisers have had to comply since November 4, 2022. Among other things, it prohibits untrue statements of material fact and material claims an adviser can't substantiate on demand, and it sets conditions for testimonials, endorsements and performance.
It doesn't care who wrote the ad. An AI-drafted post is held to the same standard as one a person wrote.
It applies to SEC-registered advisers. State-registered advisers follow their state's advertising rules, and broker-dealer communications fall under FINRA Rule 2210.
Why it matters for advisors
As advisors use AI to produce more marketing, more content falls under the rule. Our Marketing Rule guide covers what that means for AI-written posts, emails and web copy, and how to review them.
Related terms
- Testimonials and endorsementsUnder the Marketing Rule, statements about an adviser by current clients (testimonials) or by non-clients (endorsements).
- Hypothetical performanceUnder the Marketing Rule, performance results not actually achieved by any of the adviser's portfolios, such as backtests and projections.
- AI washingOverstating or misrepresenting how a firm uses AI. The SEC has charged advisers for false AI claims under existing rules.
- FINRA Rule 2210FINRA's rule on broker-dealer communications with the public, which applies whether a person or an AI tool wrote the content.
- AI marketing compliance reviewSoftware that uses AI to flag possible problems in marketing and communications before compliance approves them.
Learn more
Sources
Not legal or compliance advice. This is a plain-English summary for general education. Rules change and depend on your firm's facts, so check the primary source and talk to your CCO or counsel before relying on it.
Last updated .