FINRA Greenlights Projection of Investment Returns – Caveats Apply
Published Date: 2/25/2026
Notice
Summary
FINRA wants to update its rule about what financial firms can say when talking to the public. They’re proposing to let firms share performance projections or target returns for investments, but only if those numbers are based on solid facts and clear conditions. This change affects anyone in the financial industry who communicates with clients and aims to make info clearer without misleading people, with the rule change open for public comments now.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 1 costs, 0 mixed.
Broker-Dealers May Share Projections
FINRA filed a proposed rule change on February 10, 2026, that would allow broker-dealers to include projections of performance or targeted returns in communications about a security, a securities portfolio, or an investment strategy when certain conditions are met. Those conditions include adopting written policies and procedures, having a reasonable basis for the assumptions used, retaining written records, and giving enough information so the audience can understand the methodology, whether projections are net of fees, and the risks and limitations.
Mass-Retail Distribution Remains Restricted
The proposed change says members generally may not include projections or targeted returns in communications directed to a mass audience or general retail investor audience. Projections should only be distributed where the member reasonably believes the intended audience has the financial expertise and resources to understand the risks and limitations.
New Compliance Burden on Firms
Under the proposal, firms that provide projections must adopt and implement written policies and procedures, have a reasonable basis for assumptions, retain written records supporting those assumptions, maintain supervisory systems (see FINRA Rule 3110(a)), and reasonably oversee any third-party models or software used to create projections. If a firm relies on a third-party model, it must obtain enough information to form a reasonable basis and must not use the model if it cannot be reasonably assured the model is sound.
Reg BI Still Applies to Retail Advice
If a member uses a projection or targeted return when recommending a securities transaction or investment strategy to a retail customer, that recommendation must comply with Regulation Best Interest (Reg BI), which requires acting in the retail customer's best interest. The proposed rule notes that Reg BI's care obligation and related policies and procedures remain applicable in such cases.
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