State securities regulators are moving toward modernizing marketing regulations for investment advisors, aiming to bring state-level rules into closer alignment with federal standards. The North American Securities Administrators Association (NASAA) is soliciting public comments on a proposed model rule through August 28, potentially reshaping how state-registered RIAs can promote their services.
The proposal follows the SEC’s overhaul of its Marketing Rule, which took effect in November 2022 and marked the first major update in decades. That rule opened the door for SEC-registered advisors to use client testimonials, third-party endorsements, and ratings in advertising, provided they follow clear disclosure and compliance requirements. Many wealth managers embraced the change as a long-overdue step toward a more modern and competitive marketing environment.
“These proposed amendments reflect NASAA’s efforts to create a model that states can adopt to modernize advertising rules for investment advisors, drawing on key elements of the SEC’s updated approach,” said NASAA President Leslie Van Buskirk.
The SEC’s revised framework has already led to a shift in how advisory firms engage with prospects and clients across digital platforms. However, the SEC has also made it clear that it is scrutinizing how firms implement the rule—and has pursued enforcement actions where marketing practices have fallen short of regulatory expectations.
NASAA’s proposal seeks to provide a model statute that state legislatures, governors, or regulatory agencies could use to update their own advisor marketing rules. The association has previously offered model rules that states adopted in areas such as elder financial abuse prevention and the recovery of unpaid arbitration awards.
But the marketing update has sparked debate among state regulators. Some NASAA members remain skeptical of permitting client testimonials or endorsements, viewing them as potentially misleading to retail investors. However, proponents argue that continuing to restrict these marketing tools puts state-registered advisors at a disadvantage relative to SEC-registered firms.
“Under the SEC Marketing Rule, some advertising activities specifically prohibited for state-registered investment advisors would be permitted,” NASAA stated in its proposal. “The ability of federally covered advisors to advertise in ways that state-registered advisors may not could put state-registered advisors at a competitive disadvantage.”
For RIAs operating under state oversight, the adoption of NASAA’s model rule could offer new opportunities to expand their marketing strategies, particularly in digital channels where testimonials and third-party validation carry significant weight with prospective clients. However, it would also introduce a new layer of compliance responsibility, mirroring the federal framework’s emphasis on disclosure, substantiation, and recordkeeping.
Wealth managers and compliance professionals should take the time to review the proposal carefully and consider submitting feedback before the August 28 deadline. The outcome could impact not just marketing practices, but how firms differentiate themselves and grow in an increasingly competitive advisory landscape.
Should states adopt the model rule, advisors will need to ensure that their compliance programs are equipped to handle the nuances of the new requirements. That includes building review and approval workflows, monitoring communications, and educating staff on what qualifies as an endorsement or testimonial under the updated standards.
Ultimately, aligning state regulations with the SEC’s Marketing Rule could create a more consistent and equitable framework across the advisory space—benefiting both advisors and the clients they serve. But it will require thoughtful implementation and robust compliance systems to make the most of the expanded flexibility while avoiding regulatory pitfalls.
