FINRA has proposed amendments to Rule 2210 that would allow broker-dealers to use projected performance and targeted returns in communications, something the rule has historically prohibited with limited exceptions.

If adopted, the changes would bring FINRA’s communications rule closer in line with the SEC’s Marketing Rule for investment advisers, reducing long-standing tension between how broker-dealers and RIAs can discuss forward-looking performance.

For compliance teams, this proposal signals a potential shift in how firms approach projections, assumptions, and disclosures in retail communications.

Why Projections Have Been Restricted

Rule 2210 has traditionally barred performance projections out of concern that they can be misleading, overly persuasive, or misunderstood, particularly by retail investors.

The SEC’s Marketing Rule, however, permits certain forms of hypothetical performance, including projections, provided advisers meet strict conditions around policies, assumptions, and disclosures.

This regulatory divide has created operational friction. Advisory clients could receive forward-looking performance information, while brokerage clients could not, simply because of the registration structure of the financial professional.

FINRA attempted to address this in 2023, but that proposal was blocked before taking effect. The current proposal reflects a renewed effort to align broker-dealer communications standards with the SEC’s framework.

What the Proposed Amendments Would Allow

Under the new proposal, broker-dealers would be permitted to present projected performance and targeted returns for securities, portfolios, or investment strategies, subject to three core conditions:

  1. Written Supervisory Procedures: Firms must adopt WSPs reasonably designed to ensure projections are relevant to the intended audience.
  2. Reasonable Basis and Recordkeeping: Firms must have a reasonable basis for the criteria and assumptions used in the projections and maintain records supporting those assumptions.
  3. Clear Disclosures: Communications must disclose whether projected performance is shown net of fees and must explain the risks and limitations associated with projections or targeted returns.

Importantly, the proposal is narrower than the SEC’s Marketing Rule. It focuses specifically on projections and targeted returns, rather than the broader category of “hypothetical performance.”

What This Means for Compliance Teams

Even though the rule is only proposed, compliance teams should not ignore it.

If adopted, firms may face increased pressure from business lines to incorporate projected returns into marketing materials. That introduces heightened supervisory, documentation, and disclosure risk.

Key considerations include:

  • Reviewing whether current WSPs address forward-looking performance at all
  • Assessing documentation standards for assumptions and modeling inputs
  • Evaluating whether surveillance programs can detect misleading or unsupported projections
  • Coordinating with legal and marketing teams before any adoption of forward-looking content

Projected performance is inherently high-risk. Even when permitted, regulators will likely scrutinize whether assumptions were reasonable and whether disclosures were sufficiently clear and balanced.