Image courtesy of Stuart Miles/

7 ways Compliance can work with investment writers for their mutual success

Compliance officers for investment management firms want their employers to market themselves successfully. After all, the lack of sales could kill the company. However, they also want their firms to stay safe from legal and regulatory threats. Marketing and compliance professionals sometimes clash. But they don’t have to. The two areas can work together so that both sides achieve their goals. I’ve observed some best practices from my years on staff—and as a freelancer—at asset management firms. Compliance officers, consider the following techniques as you seek the best possible outcomes for the companies you serve. Your firm’s investment marketing compliance and its marketing will benefit.

One of the most useful things you can do is to educate members of the marketing department. Help them to understand what’s forbidden outright, where there’s room for negotiation, and what’s indisputably acceptable. Let them know how to work most effectively with you, in terms of issues such as turnaround time and when to involve you in projects. After you teach them, you’ll have fewer headaches. Writers can’t avoid investment marketing compliance mistakes that they don’t understand.

This piece incorporates feedback from three compliance professionals who generously gave me feedback on it. A fourth pro responded to my initial draft with, “It’s perfect. Good information…great piece!!!”

1. Train employees in investment marketing compliance

If you’re a compliance officer for an investment management firm, you know the most common mistakes that marketers make. They’re things like over-promising what the firm’s investments can deliver or failing to use the proper disclosures. If your firm has the resources, create a course that trains writers in investment marketing compliance as it relates to communications. Your firm already offers some sort of compliance training so it should be simple to add a communications unit.

Firms that I’ve freelanced for have conducted training in different ways. A very large firm offered automated online training to its writers. A smaller firm simply put me on a phone call with a compliance officer.

Compliance consultant Nancy Lininger of The Consortium suggests the following:

Compliance officers should provide the writers with the outline of the 5 advertising rules under the Investment Advisers Act as a handy reference:

1. Testimonials are prohibited.

2. Past specific recommendations must include multiple disclosures.

3. Graphs, charts, formulas, or other devices must disclose limitations and difficulties with respect to its use.

4. Statements of free services must actually be free without conditions.

5. The Act contains a general anti-fraud prohibition, “which contains any untrue statement of a material fact, or which is otherwise false or misleading.”

She says, “Whatever the SEC does not like and cannot pin to a specific rule, they will peg to #5 as ‘otherwise false or misleading.’ ”

Wayne Holbrook, chief operating officer and chief compliance officer, Cornerstone Investment Partners, offered suggestions for topics to cover in training or in one-on-one discussions with writers. “I have my regular topics to check for: past specific recommendations, guarantees, sourcing of all data, proper GIPS performance disclosures and then disclose, disclose disclose. For me, whenever in doubt, add a disclosure.”

He also recommends asking writers, “Who is your audience?” He says, “From there it has been easier to train folks that different audiences have different rules,” referring to differences in how one can communicate with current clients vs. institutional investors vs. retail investors.

2. Link to regulatory resources

Written resources can help to educate your firm’s writers in best practices for investment marketing compliance. A starting point might be to provide links to relevant publications from regulators. These may include SEC publications, such as Investment Adviser Use of Social Media, or from FINRA or state securities regulators. FINRA tends to issue more explicit guidelines than the SEC. Third parties, such as law firms or compliance consultants may also publish useful resources.

Holbrook says that no one wants to read regulations. I don’t either. But sometimes you run into writers who seek back-up for your opinions. They don’t believe you without documentation. Pointing them to the regulations can help. However, my suggestion #3 may prove more informative for your writers.

3. Interpret the regulators’ rules in writing

Regulators’ publications can be difficult to interpret. After all, that’s partly why you play such an important role in your company. If you sometimes struggle to understand the regulators’ intent, imagine how much harder it is for writers to understand investment marketing compliance regulations.

As a writer, I’d like to see specific examples of what is—or is not—acceptable, with an explanation of why. You might create a table with three columns:

  1. Example
  2. What’s wrong with the example—and why
  3. A rewritten example that works—and why

You might divide your document by topic. For example, assets under management, disclosures, documentation, links to external sites, performance, or record-keeping.

I wish someone had created a document like this for me when I worked as a staff writer. However, as I learned new tips, I recorded them for the future. I became a big user of hedging terms, such as “we believe.” I squirreled away disclosures that could be updated when I couldn’t avoid mentioning a mutual fund. I also learned to note the source and date of any third-party information that I used.

Speaking of hedging, Lininger says,

Most marketers/writers do not want to use hedging words. They believe the most impact is made with bold statements such as, “You will be able to retire in style by following our advice.”  That would be promissory language that would be false and misleading.  In addition to getting you in trouble with the regulators, you have given yourself a noose to hang on in court when a client sues. I believe with the right choice of words, you can appropriately hedge (thus protecting the firm and the advisor) while still making a marketing impact. A rewrite might look like this, “Our goal is to lead you to retiring in style by balancing your stated risk/reward objectives.”

By the way, the Holbrook says, “I really liked your idea about creating a table in #3. I am going to try to create one for my firm.” That comment made my day.

4. Provide feedback—in writing and face to face

Training and written materials can’t prepare you or your firm’s writers for every situation. This makes your feedback essential. You can help your writers grasp the nuances of broad rules for investment management compliance.

When content raises compliance issues, suggest ways to rewrite it—including adding disclosures—to make it acceptable. If you delete content as too objectionable, say why.

A compliance officer who asked to remain unnamed says, “Work with writers to find a way to say, ‘yes.’ Sometimes it may require the compliance officer to answer the question of ‘Is this truly non-compliant or just something that hasn’t been done before?’ and then think through the communication rules.”

Sometimes it makes sense to meet face to face with the writers. A back-and-forth conversation can clear up misunderstandings faster than a chain of emails. Holbrook says, “I try to sit down with the writers to go over the material face to face rather than through emails. It is easier for me to tell if someone is understanding what I am correcting when we can discuss it at length.” I like his point about watching the writer’s face to see if they grasp his message.

5. Distinguish between comments on compliance vs. on style

I know some compliance officers who are fine editors and proofreaders. I’ve benefited from their feedback.

However, please be clear if what you’re suggesting is a stylistic suggestion rather than a compliance necessity. There can be legitimate differences about style.

6. Manage expectations for turnaround times

You can almost never complete your compliance review fast enough to make the writers happy. However, you can ease the tension by managing writers’ expectations about the speed of your review.

Provide guidelines about how long it will generally take you to review documents. Your guidelines may vary according to the length, timing, or complexity of the document submitted for review.

7. Tell writers how to work with you

Make your job easier by telling writers how to work better with you.

For example, on a project such as a brochure or a web page for a new product, you may wish to see a first draft so you can flag issues early on. It’s frustrating for everyone if the text gets approved all the way up the corporate hierarchy only to be shot down by compliance. An early intervention could have directed everyone’s energy more productively.

Make writers aware of back-up documentation, if any, that you’d like them to submit as part of the review process. Of course, writers also need to know what to keep to satisfy record-keeping requirements.

YOUR suggestions?

What are your suggestions for how compliance professionals and writers can work together more productively on investment marketing compliance? As the unnamed compliance professional says, “We sometimes get a bad rap as ‘Sales Killers,’ but the best understand the need to market to potential new clients (and make sales) AND the need to be compliant!” Your suggestions can help compliance professionals and writers to balance these goals.

For another perspective on this topic, read 6 tips to keep your compliance officers happy.

‘Image courtesy of Stuart Miles/

2 replies
  1. Herb Chain
    Herb Chain says:

    Excellent piece, Susan — and critical. In my years of working with investment professionals (clients) I have found the most “successful” houses follow these, and other guidelines. (I started and ran Deloitte’s GIPS practice for many years and interfaced with investment performance, marketing and compliance professionals in that role.)

    A priority component in each of your areas is communication – early, often and continuous. And of course a tone at the top from the board and senior executives fostering such communication.

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