Solicitor
Solicitor
A third party (now termed "promoter" under the SEC's 2020 Marketing Rule) who provides testimonials or endorsements for an investment adviser in exchange for compensation. The Marketing Rule, effective November 2022, requires a written agreement between the adviser and promoter, plus clear disclosure of the compensation arrangement within the testimonial or endorsement itself. The promoter cannot be subject to SEC or state disciplinary disqualifications.
A certified financial planner refers clients to an RIA in exchange for 20% of the first year's advisory fees. Under the Marketing Rule, the RIA must have a written agreement with the planner (promoter), and any testimonial or endorsement the planner provides must clearly disclose the compensation arrangement and material conflicts of interest. No separate disclosure document or client acknowledgment is required under current rules.
The old Cash Solicitation Rule (206(4)-3) was replaced by the Marketing Rule in 2020. KEY CHANGES: (1) No separate solicitor disclosure document required. disclosures are embedded in the testimonial/endorsement, (2) No client acknowledgment requirement, (3) Terminology shifted to "promoter" for those providing testimonials/endorsements. Promoters are still NOT employees or IARs. they remain independent third parties compensated for referrals.
How This Is Tested
- Identifying when a third-party referral arrangement triggers Marketing Rule promoter requirements
- Understanding the written agreement requirement between adviser and promoter
- Recognizing that disclosure is embedded in testimonials, not a separate document (post-2020)
- Distinguishing promoters from IARs and employees
- Knowing the de minimis exception ($1,000 or less in trailing 12 months)
- Understanding disqualification criteria for promoters
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| Written agreement required | Must exist between adviser and promoter | Before promoter provides testimonials/endorsements (SEC Marketing Rule, effective Nov 2022). De minimis exception: not required if total compensation ≤$1,000 in trailing 12 months |
| Disclosure in testimonial/endorsement | Clear and prominent disclosure of compensation and conflicts | Disclosures must be included within the testimonial/endorsement itself. No separate disclosure document required (post-2020 change) |
| Promoter disqualification | No disciplinary history or disqualification events | Promoters cannot be subject to SEC or state disciplinary orders, or convicted of certain financial crimes |
| Oversight requirement | Adviser must have reasonable basis for believing promoter complies | Adviser responsible for monitoring promoter compliance with disclosure requirements |
Example Exam Questions
Test your understanding with these practice questions. Select an answer to see the explanation.
Rebecca, a tax attorney, regularly refers high-net-worth clients to Greenfield Advisers, an SEC-registered RIA. In exchange, Greenfield pays Rebecca 15% of the advisory fees collected from each referred client during their first year. Under the SEC's current Marketing Rule (effective 2022), which of the following is REQUIRED?
B is correct. Under the SEC's Marketing Rule (effective November 2022), investment advisers using promoters (formerly called solicitors) must have a written agreement with the promoter, and any testimonial or endorsement provided by the promoter must clearly disclose the compensation arrangement and material conflicts. The disclosure is embedded within the testimonial itself.
A is incorrect because the Marketing Rule ELIMINATED the requirement for a separate solicitor disclosure document. Disclosures are now included within the testimonial/endorsement, not as a standalone document. C is incorrect because promoters do NOT register as IARs. IARs are employees or associated persons who provide ongoing investment advice, while promoters are independent third parties who provide testimonials/endorsements. D is incorrect because the Marketing Rule ELIMINATED the client acknowledgment requirement that existed under the old Cash Solicitation Rule.
The Series 65 exam tests current Marketing Rule requirements, which significantly simplified promoter (solicitor) arrangements compared to the old Cash Solicitation Rule. Understanding what was eliminated (separate disclosure document, client acknowledgments) versus what remains (written agreement, embedded disclosures) is essential for the exam.
Under the SEC's current Marketing Rule for investment advisers, what is the de minimis exception threshold for promoter compensation that does NOT require a written agreement?
B is correct. The Marketing Rule includes a de minimis exception: if the total compensation paid to a promoter does not exceed $1,000 in the trailing 12 months, a written agreement is not required. However, disclosure of the compensation arrangement must still be included in any testimonial or endorsement provided by the promoter.
A is incorrect because the threshold is $1,000, not $500. C is incorrect because the threshold is based on total compensation to the promoter over 12 months, not a per-client basis. D is incorrect because the de minimis exception does exist. it was added in the 2020 Marketing Rule to reduce compliance burden for small referral arrangements.
The de minimis exception is frequently tested because it represents a practical compliance simplification. Understanding the $1,000 threshold and that it applies to the trailing 12 months (not per-referral) is important for exam preparation.
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Access Free BetaFairview Advisers has a written promoter agreement with Mark, who refers three new clients in Q1. Client A has $500,000 AUM at 1.00% annual fee. Client B has $300,000 at 1.00%. Client C has $200,000 at 0.80%. The agreement pays Mark 25% of first-year advisory fees. What is Mark's total compensation from these referrals in year one?
B is correct. Calculate each client's first-year advisory fee, then multiply by 25%:
Client A: $500,000 × 1.00% = $5,000 annual fee → $5,000 × 25% = $1,250
Client B: $300,000 × 1.00% = $3,000 annual fee → $3,000 × 25% = $750
Client C: $200,000 × 0.80% = $1,600 annual fee → $1,600 × 25% = $400
Total promoter compensation: $1,250 + $750 + $400 = $2,400
A ($2,000) incorrectly uses 0.80% for all three clients or miscalculates the referral percentage. C ($2,500) uses 1.00% for all clients ($1M total AUM × 1.00% × 25% = $2,500) but ignores Client C's lower 0.80% fee rate. D ($9,600) incorrectly calculates total advisory fees rather than the promoter's 25% share.
The Series 65 exam tests calculation of promoter/solicitor compensation based on referral agreements. Understanding how to apply percentage-based compensation structures across multiple clients with different fee schedules is essential for compliance planning.
Under the SEC's current Marketing Rule for investment advisers, all of the following are required for promoter (formerly solicitor) arrangements EXCEPT
C is correct (the EXCEPT answer). The Marketing Rule ELIMINATED the requirement for a separate written disclosure document. Under the old Cash Solicitation Rule (pre-2020), advisers had to provide both the Form ADV brochure and a separate solicitor disclosure document. The new Marketing Rule simplified this: disclosure of the compensation arrangement and conflicts must be included within the testimonial or endorsement itself, but no separate document is required.
A is accurate: a written agreement is required unless compensation is ≤$1,000 in the trailing 12 months (de minimis exception). B is accurate: the Marketing Rule requires clear and prominent disclosure within the testimonial/endorsement, making the conflict transparent to prospective clients. D is accurate: promoters cannot be subject to certain SEC or state disciplinary orders or have specified criminal convictions.
The Series 65 exam tests your understanding of what changed between the old Cash Solicitation Rule and the current Marketing Rule. The elimination of separate disclosure documents and client acknowledgments are major changes that simplify compliance and are frequently tested.
Coastal Wealth Management, an SEC-registered RIA, enters into a promoter agreement with Jennifer, a CPA who provides testimonials for referral compensation. Which of the following are required under the current Marketing Rule?
1. A written agreement between Coastal and Jennifer (assuming >$1,000 compensation)
2. Jennifer must register as an Investment Adviser Representative (IAR)
3. Jennifer's testimonials must include clear disclosure of her compensation arrangement
4. Coastal must obtain signed client acknowledgments of receiving Jennifer's disclosure
B is correct. Only statements 1 and 3 are required under the current Marketing Rule.
Statement 1 is TRUE: A written agreement between the adviser and promoter is required (assuming compensation exceeds the $1,000 de minimis threshold). This agreement must outline the promoter's responsibilities and the adviser's oversight obligations.
Statement 2 is FALSE: Promoters do NOT register as Investment Adviser Representatives (IARs). IARs are employees or associated persons of the adviser who provide ongoing investment advice and owe fiduciary duty. Promoters are independent third parties who provide testimonials/endorsements and are governed by the Marketing Rule, not IAR registration requirements.
Statement 3 is TRUE: Jennifer's testimonials must include clear and prominent disclosure of her compensation arrangement with Coastal and any material conflicts of interest. This disclosure is embedded within the testimonial itself under the Marketing Rule.
Statement 4 is FALSE: The Marketing Rule ELIMINATED the client acknowledgment requirement that existed under the old Cash Solicitation Rule (206(4)-3). Advisers no longer need to obtain or retain signed acknowledgments from clients.
The Series 65 exam extensively tests the changes between the old solicitor rules and the current Marketing Rule. Understanding what was eliminated (client acknowledgments, separate disclosure documents) versus what remains (written agreements, embedded disclosures) is critical for passing the exam.
💡 Memory Aid
Marketing Rule (2020) simplified promoter rules: Now just 3 requirements - Written Agreement (unless de minimis <$1K), Ad-embedded disclosure (compensation shown IN the testimonial), and Disqualification-free status. What's GONE: Separate solicitor docs, client acknowledgment signatures. Remember: "WAD in, Paperwork OUT."
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This term is part of this cluster:
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Where This Appears on the Exam
This term is tested in the following Series 65 exam topics:
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