Which statement is true concerning the responsibilities of a principal of a broker-dealer?

The statement that a principal must approve retail communications prior to use is accurate because regulations require that all retail communications sent to customers must receive approval from a registered principal of the broker-dealer. This ensures that the content meets regulatory standards and is not misleading or deceptive, providing a layer of oversight to protect investors. It's a critical role for principals to safeguard the firm’s compliance with applicable rules.

In contrast, principals cannot delegate all communication approvals, as they retain ultimate responsibility for ensuring communications comply with regulatory standards. Furthermore, a principal is indeed responsible for the content of advertising, especially in terms of compliance and accuracy, so the assertion that they are not responsible for advertising content is incorrect. Lastly, the requirement for approval of communications is not solely limited to institutional investors; it applies broadly to retail communications, thereby making the other options invalid in the context of broker-dealer responsibilities.