Count the retail investors and count the days. Twenty-five in thirty is the line between correspondence and retail communication.
Three categories, decided by audience and headcount
Every communication a firm sends falls into one of three categories, and the category decides how closely it must be supervised. The test is who receives it and how many of them: correspondence is a written communication distributed or made available to 25 or fewer retail investors within any 30 calendar-day period. Anything reaching more than that number of retail investors is a retail communication.
Retail communications carry the heaviest requirements because they reach the most people who need protection. As a general rule a registered principal must approve them before they are used or filed, and certain categories must also be filed with FINRA. Advertisements, websites, seminar material and social media posts open to the public all sit here, whatever they are called internally.
Institutional communications go only to institutional investors, a defined group of banks, insurers, registered firms, larger entities and similar counterparties. They do not require prior principal approval, but the firm must have written procedures for their review and must supervise them, and the exemption is lost if the firm has reason to believe the communication, or any excerpt of it, will be forwarded or made available to a retail investor.
Correspondence sits in between: it is not pre-approved item by item, but it is subject to the firm’s supervision, review and retention procedures. Two habits keep the category questions right. Count only retail investors, not every recipient, and count within a rolling 30 calendar-day window rather than per message.
Exam terms
- Correspondence
- A written communication to 25 or fewer retail investors within 30 calendar days.
- Retail communication
- A written communication to more than 25 retail investors in 30 calendar days.
- Institutional communication
- A written communication only to institutional investors.
- Retail investor
- Any person who is not an institutional investor.
- Principal approval
- Sign-off by a registered principal, generally required before retail use.
- Supervision and review
- The firm’s procedures for checking communications that are not pre-approved.
Three categories of communication
| Correspondence | Retail communication | Institutional communication | |
|---|---|---|---|
| Who receives it | Retail investors | Retail investors | Institutional investors only |
| How many | 25 or fewer in 30 calendar days | More than 25 in 30 calendar days | Any number |
| Prior principal approval | Not generally required | Generally required | Not required |
| Supervision | Firm review procedures | Approval plus procedures | Written review procedures |
| If forwarded to retail | Recount the recipients | Already retail | Loses the exemption |
Try it: Classify four items before reading on: a letter sent to twelve clients this month; the same letter sent to sixty clients; a market note sent only to pension funds; and that same market note after the firm learns a pension fund is forwarding it to its retail customers. Two of the four change category because of who ends up reading them.
The rules that apply when the communication is a phone call
The categories above sort written material by how many retail investors see it. A telephone call is not sorted that way, and it has a short set of rules of its own.
Start with the hours. A member may not make a telephone solicitation to the residence of any person before 8 a.m. or after 9 p.m. local time at the called party’s location. The last five words are the tested part: the clock that governs is the one where the person picking up is, not the one on the caller’s desk. A representative in New York calling California at 8 p.m. Eastern is calling at 5 p.m. Pacific and is fine; calling at 7 a.m. Eastern is calling at 4 a.m. Pacific and is not.
Then the list. Where a member receives a request from a person not to receive calls from that member, it must record the request and place that person’s name, if provided, and telephone number on the firm’s do-not-call list. The request is made to the firm and binds the firm; the person is not being sent off to register somewhere else, and no further step is required of them. There is a second list the firm must respect. It may not call a number on the Federal Trade Commission’s national do-not-call registry, unless an exception applies, such as an established business relationship (for example, account activity in the past 18 months). A request to be put on the firm’s own list ends that relationship for calling purposes.
Then the disclosures. On an outbound telephone call the caller must give four things: the name of the individual caller, the name of the member, an address or telephone number at which the member may be contacted, and the fact that the purpose of the call is to solicit the purchase of securities or a related service. The fourth is the one people forget, and it is the one that stops the call opening as a survey or a courtesy.
Exam terms
- Telephone solicitation
- A call to a residence made to solicit the purchase of securities or a related service.
- Calling hours
- 8 a.m. to 9 p.m., measured where the person called is.
- Firm do-not-call list
- The record of people who have asked that firm to stop calling them.
- National do-not-call registry
- The FTC list of numbers a firm may not call, unless it has an established business relationship with the person.
- Correspondence: ≤25 retail investors in 30 days.
- Retail: >25; generally principal pre-approval.
- Institutional: institutional investors only.
- Calls: 8 a.m. to 9 p.m. on the called party’s clock, four disclosures, and a request to stop goes on the firm’s own list. Numbers on the national registry are off-limits too, unless there is an established business relationship.
Two duties that come with the message
Classifying a communication settles who must review it. Two further rules decide what may be in it and what is owed to the person reading it, and both are tested here because both are easy to assume away.
A recommendation brings a care duty. For a retail customer it is Regulation Best Interest; for anyone else it is FINRA’s suitability rule, under which a member must have a reasonable basis to believe that a recommended transaction is suitable for the customer, on information gathered about that customer. An order the customer brings unprompted is not a recommendation, so neither duty attaches — while the know-your-customer duty, which runs with the opening and maintenance of every account, continues either way.
An advertisement that quotes an investment company’s performance may not choose its own window. Average annual total return must be given for one, five and ten year periods, computed by the prescribed method, current to the most recent calendar quarter, and set out with equal prominence. A single flattering year, however accurately reported, is not a compliant advertisement.
The closest contrast
Correspondence: supervised.
Retail: approved first.
The distinction decides whether a principal must sign off before the material goes out. Crossing 25 retail investors inside the 30-day window turns a supervised letter into a communication that needed approval before it was sent.
Worked example
A representative sends the same market letter to 20 retail clients on the first of the month and to another 20 retail clients three weeks later.
- Take the first mailing alone. Twenty retail investors is 25 or fewer, so on its own that mailing is correspondence.
- Now apply the window. The second mailing falls within 30 calendar days of the first, so the two are counted together and the total is 40 retail investors.
- Forty is more than 25, so the letter is a retail communication and should have had principal approval before it was used.
- Adding a further 100 institutional recipients would not change the answer either way, because only retail investors are counted towards the threshold.
- The practical lesson is that the category can change after the first mailing has gone out, which is why firms treat a letter intended for wide distribution as a retail communication from the start.
Check yourself
Try a question, then read the explanation to review the rule.
Opening your study record…
Same rule, new context
Opening your study record…
Summary
- Correspondence reaches 25 or fewer retail investors within 30 calendar days.
- More than 25 retail investors in that window makes it a retail communication, generally needing principal approval.
- Institutional communications go only to institutional investors and need written review procedures.
- Count retail investors only, and count across the rolling 30-day window rather than per mailing.
Related practice
- Communication category by audiencePractice this
- Telemarketing hours, disclosures and the do-not-call listPractice this
Sources
- SIE Examination Content Outline (2025) · FINRA · checked 2026-10-12
- FINRA Rule 2210 — Communications with the Public · FINRA · checked 2026-09-02
- FINRA Rule 2210(a)(4) — Institutional investor definition, forwarding limit · FINRA · checked 2026-09-29
- FINRA Rule 3230 — Telemarketing · FINRA · checked 2026-09-04
- 17 CFR 230.482 — Advertising by an investment company, standardised performance · SEC · checked 2026-09-04
- FINRA Rule 3230(a)(3) and (b)(1) — Telemarketing, national do-not-call list · FINRA · checked 2026-10-09
- 17 CFR 240.15l-1 — Regulation Best Interest · SEC · checked 2026-09-04
- FINRA Rule 2111 — Suitability · FINRA · checked 2026-09-04
- FINRA Rule 2111 — Suitability, Supplementary Material .08 (Regulation Best Interest) and .05(c) (quantitative suitability) · FINRA · checked 2026-10-09