How far can RIAs go with advertisements?
Don't take your cues from restaurants or lawyers
NCS Regulatory Compliance
Top Executive: Mark Alcaide, COO/Partner
Your comments above in the section entitled “Don’t Forget You’re a Fiduciary” are 100% wrong. When it comes to advertising rules, we are not fiduciaries. A person or company becomes a fiduciary in connection with an EXISTING investment advisory relationship, not as a result of sending out or creating marketing materials.
The fiduciary duty owed by investment advisers arises from Section 206 of the Investment Advisers Act. Here are a few sentences from Section 206:
Section 206 — Prohibited Transactions by Investment Advisers
It shall be unlawful for any investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly—
a.to employ any device, scheme, or artifice to defraud any client or prospective client;
b.to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;
I believe RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not. I would argue that if they deviate from the fiduciary standard of full disclosure while courting clients, they will cause themselves significant problems down the road. I would hate to think that IARs tell themselves they are not a fiduciary yet, so they can be less than forthcoming in their marketing efforts and interactions with prospective clients.
Thanks for elaborating on this point.