Matt Reiner gives input on how heavily financial advisors rely on word of mouth to help broaden their client base.

These new SEC rules will transform the way RIA’s and financial advisors advertise and bring new clients in.

Most everyone has seen television ads with law firms touting their performance.  Clients (or actors?) invariably state what befell them — a car crash or some other harm — then briefly describe their dramatic turn of fortune because they called the law firm. The settlement money they received is almost always highlighted.

RIAs can’t be so brazen. 

Their compliance department, if they have one, is constantly hounding them: no testimonials, don’t say anything that can be misconstrued or breaks Rule 206 of the Investment Advisers Act of 1940.

To the delight of some advisors, that might soon change.”

Read the original article here.