The Footnote 590 Relief Is Narrower Than the Headlines Said

Footnote 590 of the Marketing Rule adopting release contains one sentence that shaped five years of investment marketing: where the fee to be charged to an advertisement’s intended audience is anticipated to be higher than the fees actually charged, the adviser “must use a model fee that reflects the anticipated fee to be charged”. Most firms read that as an instruction and complied by deducting a model fee, often showing prospects a return lower than any real investor experienced.

On 15 January 2026 the staff of the SEC’s Division of Investment Management published two new FAQs, and the industry read the first one as the end of that requirement. That is not what it says.

What the FAQ actually says

The staff noted that some advisers had interpreted footnote 590 to categorically require model-fee net performance and to prohibit actual-fee net performance in that scenario. The correction is that footnote 590 should be read through the lens of the rule’s general prohibitions rather than as a standalone mandate. Whether presenting actual fees violates those prohibitions depends on the facts and circumstances of the specific advertisement, including its disclosures, and advisers may use various means to illustrate the difference between actual and anticipated fees (SEC Marketing Compliance FAQs, updated 15 January 2026).

Read the rest of the answer before redesigning anything. The staff also said that in some circumstances it may be inconsistent with the general prohibitions to present net performance reflecting actual fees alone, and pointed specifically at Rule 206(4)-1(a)(3) and (a)(6) as the provisions likely to be implicated. It did not say what disclosure would be sufficient. Where anticipated fees are higher than historical ones and the difference is material to the reader, a model fee remains the safer presentation.

Two further things worth holding onto. This is staff guidance, not a rule amendment: the text of the Marketing Rule always permitted either actual or model fees, and what changed is the staff’s stated view of a footnote. And staff positions can be revisited.

You traded a bright line for a burden of proof

A prescriptive rule is unpleasant to comply with and easy to evidence. You either deducted the model fee or you did not. A facts-and-circumstances standard is more permissive and much harder to defend after the fact, because the defense is no longer the number itself but the reasoning that produced it.

Which makes documentation the actual deliverable. For every piece of collateral showing net performance, a marketing team should be able to produce the fee basis used, the intended audience it was chosen for, why that basis is fair and balanced for that audience, the disclosure language accompanying it, and the name of the person who approved it. None of that is a compliance department’s job alone. It is a production step, and it belongs in the workflow that creates the asset rather than the review that follows it.

Marketers who have not worked in a regulated profession consistently underestimate what that does to campaign velocity. The same constraint governs professional services generally, and the way to handle it is the same everywhere: build an approved claims bank first and vary inside it, which is why a review cycle should be the first thing you ask an agency about.

The promoter FAQ reopens a talent pool and attaches a disclosure to it

The second FAQ is narrower than the first but commercially more concrete. The Marketing Rule bars advisers from compensating ineligible persons for testimonials and endorsements, and while the rule carves out certain SEC orders, it contained no equivalent carve-out for final orders from self-regulatory organizations such as FINRA. A legacy FINRA order therefore disqualified an otherwise capable promoter.

The staff will now not recommend enforcement action where the sole reason the person is ineligible is the SRO final order, the SRO did not expel or suspend them from membership, bar or suspend them from association, or prohibit them from acting in any capacity, and the person is in compliance with the order’s terms, including any disgorgement, interest, penalties and fines. The fourth condition is the one that lands on the creative team: for ten years following the order, any advertisement containing that testimonial or endorsement must disclose that the person is subject to an SRO order and include the order or a link to it.

So a legal hard stop becomes a conversion question. You can engage the partner, and every ad unit carrying their endorsement now carries a disciplinary disclosure. Whether that is worth it is testable rather than theoretical, and the sensible order of operations is to test the disclosed creative against your existing control before renegotiating anyone’s rate.

What to do in the next month

Audit every asset that displays net performance and sort it by intended audience rather than by format. Where anticipated fees match historical ones, this changes nothing. Where they differ, decide the basis deliberately, write the disclosure, and record the reasoning in the same place you keep the asset.

Refresh your promoter eligibility representations to cover SRO orders specifically, and build the ten-year disclosure into ad templates rather than adding it by hand each time. Then resist the obvious temptation. Better-looking net numbers make bottom-of-funnel campaigns look more attractive, and pouring the difference into demand you already had is how a channel comes to report results it is not producing.

One note if an agency is running any of this for you. In regulated categories the outcome a fee is written against is partly a compliance artifact rather than a market result, which makes the definitions inside a performance agreement more load-bearing than usual. And when a prospective agency shows you performance figures from a financial-services client, the presentation itself tells you whether they know these rules exist, which is the cheapest of the questions worth asking before you sign.

The firms that benefit from a change like this are rarely the ones that move fastest. They are the ones whose campaign operations can absorb a new fee basis without a three-week approval cycle, and whose published explanation of the change is what advisers find when they search for it a month later.

Frequently Asked Questions

Can we now show net performance using actual fees?

Sometimes, and only with reasoning you can produce later. The staff said footnote 590 does not categorically require model fees, and that whether actual fees are acceptable turns on the facts and circumstances of the specific advertisement, including its disclosures. It also said presenting actual fees alone may be inconsistent with the general prohibitions in some situations. Where anticipated fees are materially higher than the fees that produced the track record, a model fee is still the defensible choice.

Does this change the Marketing Rule itself?

No. The rule always allowed net performance to be calculated using either actual fees or a model fee. What changed is the staff’s stated interpretation of a footnote in the adopting release that the industry had read as a mandate. FAQs are staff guidance rather than Commission rulemaking, they carry no independent legal force, and they can be updated or withdrawn. Treat this as reduced interpretive risk, not as a new permission.

Which promoters can we now compensate?

Those whose only disqualification is an SRO final order, where the SRO did not expel, suspend, bar or prohibit them from acting in any capacity, and who are complying with the order’s terms including any monetary components. The compensation is permitted only if every advertisement carrying their testimonial or endorsement discloses the order and includes it or a link to it, for ten years from the date of the order.

What should we keep on file?

For each advertisement showing net performance: the fee basis used, the intended audience, the reasoning for choosing that basis, the disclosure language, the approval, and the date. For each compensated promoter: written representations covering SRO orders, evidence of compliance with any order’s terms, and a record of where the required disclosure appears. Under a facts-and-circumstances standard, the file is the defense.