The same cannot be said for the Institute for the Fiduciary Standard, which said that the SEC’s proposal to effectively lift the ban on testimonials and endorsements in advertisements is a bad idea.
“Ads inherently mislead and can blur important differences in 2020 as they did in 1961. There may be parts of the 1961 advertising rule that deserve updating. The ban on testimonials and endorsements is not one of them,” said Institute President Knut Rostad.
“The reason is the rationale for the ban remains solid after decades. The SEC offers no new research or compelling analytical insights to refute the basis for the ban. Further, the SEC does not make a strong case that such advertising will help investors,” Rostad said.
While the SEC asserts in its rule that consumers ‘seek out and consider the views of others’ when making purchasing decisions, citing decisions that range ‘from purchasing a coffee-maker to finding the right medical expert’ Rostad argued that choosing personalized financial or investment advice provided in trust and confidence from a fiduciary should not be equated to purchasing a restaurant meal or kitchen appliance.