Finra wants to raise the annual gift limit

Finra wants to raise the annual gift limit
Brokerage representatives will be able to breathe a little easier when they're buying gift baskets for fellow professionals during the next holiday season.
AUG 23, 2016
With any luck, brokerage reps will be able to breathe a little easier when they're buying gift baskets for fellow professionals during the next holiday season. According to a proposed rule change from Finra earlier this month, the self-regulatory body wants to increase the total annual value of gifts that can be given to individuals to $175 per year from $100. The value of the current $100 limit, which has been in place since 1992, when it was increased from $50, has been eroded by inflation, according to an analysis by the Financial Industry Regulatory Authority Inc. As inflation has grown at an average annual rate of 2% over the past 24 years, brokers have been forced to hold back on the amount of appreciation they could express to individuals at firms with which they do business. Even though a new $175 limit could be lagging inflation again shortly after taking effect, it is viewed as progress, according to Myles Blechner, senior consultant at NCS Regulatory Compliance. “Just the fact that they're looking to update it is a step in the right direction,” he said. “It's really hard to find a nice gift basket for less than $100.” (More: New Finra execs should toughen investor protection rules) Gift-basket price inflation notwithstanding, the proposed rule change does introduce some quizzical realities about what does and does not constitute a conflict of interest, and the guesswork around quantifying the influence.

ARBITRARY LIMITS

According to Finra's current guidelines, giving someone $100 worth of gifts during a single year is just being polite, but at $101, that broker or rep has meandered into a potential conflict of interest. Some will argue that the line has to be set somewhere and a higher dollar limit is better because, well, those darn gift baskets are not getting any cheaper. But another way of looking at it could be that arbitrary limits on the value of gifts just add up to arbitrary assumptions on what it costs to influence another professional. Most ludicrous of all is the idea of dancing around the value of a potential conflict of interest. Because, as the saying goes, a potential conflict of interest is a conflict of interest. If Finra really wants to have an impact on this issue, it should either place a general ban on the practice of gift giving or remove the limit entirely. (More: Finra targets variable annuities as 'sweet spot' of scrutiny)

Latest News

Mesirow acquires part of flexPATH in second retirement deal of 2026
Mesirow acquires part of flexPATH in second retirement deal of 2026

Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.

Advisor moves: LPL lands $350M veteran advisor duo in Florida
Advisor moves: LPL lands $350M veteran advisor duo in Florida

Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.

SEC accuses crypto firm founder of running $425 million Ponzi scheme
SEC accuses crypto firm founder of running $425 million Ponzi scheme

It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.

MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products
MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products

Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.

Fintech bytes: Wealth tech firms target advisor productivity with new integrations
Fintech bytes: Wealth tech firms target advisor productivity with new integrations

Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income