The Securities and Exchange Commission is expanding its exams to look at how advisors are using client testimonials and endorsements, third-party ratings and Form ADV disclosures under its marketing rule, the agency said in a risk alert.

SEC staff is “conducting focused examinations, as well as broad reviews into testimonials and endorsements” to see if there is clear disclosure about whether the person giving the testimonial or endorsement is a client or investor, to know whether the promoter has been paid or find out if there are material conflicts of interest, the SEC said.

Examiners will also be looking to see that advisors have written agreements with any promoter they’re using, unless they’re affiliates of the advisor or the affiliation is disclosed or the promoters received compensation of $1,000 or less during the preceding 12 months, the SEC said in the June alert.

Advisors should also expect the SEC to flag instances where “ineligible persons have been compensated for testimonials or endorsements.” That includes instances in which the advisor knew or should have known the person was ineligible, or was a “bad actor” prohibited from acting as a promoter, the agency said. Such people would be ineligible to provide testimonials if they have disqualifying criminal convictions or are the subject of an SEC opinion or order barring, suspending or prohibiting them from acting in any capacity under the federal securities laws.

SEC examiners will also be looking to ensure any third-party ratings in advertisements provide clear and prominent disclosure of the date of the rating, the period of time it covers, the identity of the third party that created the rating and any compensation the third party was paid, the SEC said.

Any questionnaires or surveys the advisor uses to collect third-party ratings must be structured to make it equally easy for a participant to provide favorable and unfavorable responses.

The agency is also expecting advisors to use the amended Form ADV to provide additional information about their marketing practices.

The SEC “encourages advisors to reflect upon their own practices, policies and procedures and to implement any appropriate modifications to their training, supervisory, oversight and compliance programs,” the agency concluded.

This is the second risk alert the SEC has issued laying out terms for advisors’ compliance with the marketing rule. The first alert, published last September, detailed policies and procedures, substantiation, performance advertising and books and records requirements.

Some companies have launched services to help advisors create an online marketing presence using client testimonials. Wealthtender.com, one of the first websites to allow investors and promoters to review advisors, has published 600 reviews on the 50 advisors who have signed up for the service so far.

“We’ve really de-risked and automated our process to make it easy for advisors to ensure they’re in compliance, but still get the benefit of a once-in-a-generation marketing opportunity to collect client reviews,” says Brian Thorp, the founder and CEO of Wealthtender.com. After an advisor gets five reviews, these can start to appear in Google searches, he adds.

For every review received, Wealthtender sends the advisor, or their compliance officer, a link that allows them to check the SEC’s three requirements: that the review was written by a client or promoter, whether or not the reviewer was compensated and whether there is a conflict of interest, Thorp says.

“If either the advisor or compliance officer needs to provide any disclosures around these three C’s, they can do so and then click submit,” adds Thorp, who says one advisor on Wealthtender.com has a review from his mom, which is acceptable under the SEC marketing rule as long as the family relationship is disclosed prominently.