Practice Management

So how much should you spend?

Dec 9, 2012 @ 12:01 am

By Liz Skinner

How much can you legally spend on holiday gifts for clients? It depends on the agency that regulates your practice.

The Securities and Ex-change Commission doesn't restrict what kinds of items financial advisers can give clients or what they can spend.

Legal experts say client gifts are generally kept below $500, however, and they recommend maintaining detailed records.

“There are no specific rules for investment advisers with regard to gifts received or given,” said Dan Bernstein, director of research and development at MarketCounsel LLC. “But some federal examiners will ask for any policies about gifts, as well as logs, and advisers need to be ready to answer that, even though the rules don't require it.”

Mr. Bernstein said that he isn't aware of any limit on gifts by state securities regulators.

Advisers in the brokerage industry who come under the auspices of the Financial Industry Regulatory Authority Inc. are limited to outlays of $100 a year per client.

Mr. Bernstein warns advisers to refrain from giving gifts to someone who controls an account but isn't the beneficiary of it, such as a trustee.

“It's OK to give a gift to keep a client happy or even to encourage them to give you more assets,” he said. “But when you try to garner favor from someone who's not the beneficiary, there's a gray area that's a little like pay-to-play.”

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