Definition
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 May 4, 2021 with compliance required from November 4, 2022, requires a written agreement between the adviser and promoter (except for no or de minimis compensation, or the adviser's own personnel and affiliates), plus disclosure of the compensation arrangement and conflicts at the time the testimonial or endorsement is disseminated, with the fact of compensation and a brief conflicts statement made clearly and prominently. The adviser may not compensate a promoter it knows, or should know, is an ineligible person (this bar does not apply to no or de minimis compensation).
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 the compensation arrangement and material conflicts of interest must be disclosed when any testimonial or endorsement the planner provides is disseminated. No separate disclosure document or client acknowledgment is required under current rules.
The old Cash Solicitation Rule (206(4)-3) was rescinded when the Marketing Rule took effect on May 4, 2021 (compliance required by November 4, 2022). Key changes: (1) No separate solicitor disclosure document required. Disclosures are made at the time the testimonial or endorsement is disseminated, (2) No client acknowledgment requirement, (3) Terminology shifted to "promoter" for those providing testimonials/endorsements. Promoters can be independent third parties or the adviser's own employees and affiliates; endorsements by employees and affiliates are exempt from the disclosure and written-agreement conditions when the affiliation is readily apparent or disclosed.
How is Solicitor tested on the exam?
- 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 made when the testimonial or endorsement is disseminated, not in a separate solicitor document (under the Marketing Rule)
- 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
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| Written agreement required | Must exist between adviser and promoter | Must describe the scope of the agreed-upon activities and the compensation terms (SEC Marketing Rule, compliance required from November 4, 2022). De minimis exception: not required if total compensation is $1,000 or less in the preceding 12 months |
| Disclosure in testimonial/endorsement | Clear and prominent disclosure of compensation and conflicts | Disclosures must be made at the time the testimonial or endorsement is disseminated, with the fact of compensation and a brief conflicts statement made clearly and prominently. No separate solicitor disclosure document required (a Marketing Rule change) |
| Promoter disqualification | Adviser may not compensate an ineligible person | Ineligible means subject to a disqualifying SEC order or a disqualifying event within 10 years (such as specified convictions or final regulatory orders); does not apply to no or de minimis compensation |
| Oversight requirement | Adviser must have reasonable basis for believing promoter complies | Adviser responsible for monitoring promoter compliance with disclosure requirements |
Marketing Rule (2020) simplified promoter rules: Core requirements include a reasonable basis for believing the testimonial or endorsement complies, plus WAD: Written Agreement (unless de minimis, $1,000 or less in 12 months), Ad-time disclosure (compensation disclosed when the testimonial is disseminated), and Disqualification check (no compensation to a promoter the adviser knows or should know is ineligible). What's gone: Separate solicitor docs, client acknowledgment signatures. Remember: "WAD in, Paperwork out."
Practice questions
Test your understanding with the questions below. Pick an answer to reveal 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 (compliance required since November 2022), which of the following is required?
B is correct. Under the SEC's Marketing Rule (compliance required from November 4, 2022), investment advisers using promoters (formerly called solicitors) must have a written agreement with the promoter, and the adviser must disclose, or reasonably believe the promoter discloses, the compensation arrangement and material conflicts. The disclosure must be made at the time the testimonial or endorsement is disseminated.
A is incorrect because the Marketing Rule eliminated the requirement for a separate solicitor disclosure document. Disclosures are now made when the testimonial or endorsement is disseminated, not in a standalone solicitor document. C is incorrect because the Marketing Rule imposes no IAR registration requirement on a promoter, and Rebecca, an independent attorney, is not a supervised person giving advice for Greenfield. 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, disclosures at the time the testimonial or endorsement is disseminated) 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 made when any testimonial or endorsement by the promoter is disseminated.
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.
Fairview 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 exception). The Marketing Rule eliminated the requirement for a separate written disclosure document. Under the old Cash Solicitation Rule (before the Marketing Rule), 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 made at the time the testimonial or endorsement is disseminated, but no separate solicitor 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 of compensation when the testimonial or endorsement is disseminated, making the conflict transparent to prospective clients. D is accurate: an adviser may not compensate an ineligible person (one subject to certain SEC orders or disqualifying events such as specified convictions), unless the compensation is de minimis.
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. Clear disclosure of Jennifer's compensation arrangement must be made when her testimonials are disseminated
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). The agreement must describe the scope of the agreed-upon activities and the terms of compensation.
Statement 2 is false: The Marketing Rule does not require a promoter to register as an Investment Adviser Representative (IAR). Jennifer is an independent CPA giving testimonials for compensation, not a supervised person giving advice for Coastal, and her arrangement is governed by the Marketing Rule's testimonial and endorsement conditions.
Statement 3 is true: Clear and prominent disclosure that Jennifer is compensated, with a brief statement of any material conflicts of interest, plus the material terms of her compensation arrangement with Coastal, must be made by Coastal or Jennifer. Under the Marketing Rule, this disclosure is made at the time the testimonial is disseminated.
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, disclosures at the time the testimonial is disseminated) is critical for passing the exam.
What concepts relate to Solicitor?
This term is part of this cluster :
Where does Solicitor appear on the Series 65 exam?
This term is tested in the following Series 65 exam topics:
Regulation of Investment Advisers
Series 65 questions on IA registration, SEC vs state jurisdiction, and federal covered advisers....
practice questions →Administrative Provisions
Practice questions on Form ADV, brochure rule, recordkeeping, custody, and advertising....
practice questions →Ethical Practices
Series 65 questions on conflicts of interest, disclosure requirements, and ethical obligations....
practice questions →