GREAT article and I 100% agree with all your points here. When I refer my clients to a Trust/Estate Attorney or to a Financial Advisor who I know will take good care of them, It is not with the expectation that I get anything in return other than more excellent service for my client. My clients truly understand that I am their Trusted Advisor. And my referral sources understand that I provide excellent service, so I am a safe place to refer THEIR clients. (applause, applause for this article!!)
Completely agree. Not only is it scarcity mentality but with all the hype and focus on passive income everyone wants to be paid and not do any work. I don't have any affiliate links and I don't take revenue share from software like QBO or gusto either. I want to look at a client and tell them the person or software I'm recommended is because I believe it's best for them and for them to have zero reason to question my recommendation or the motivation behind it.
When it's another professional, I feel like they're doing me a favor by taking the client. I certainly don't expect to be compensated when they're helping me out by covering an area for a client I don't or can't cover.
I am immediately suspicious when someone "offers me a client" but wants a fee. It just feels slimy, and I would rather not go there.
I routinely refer tax clients with investment questions to the firm that bought my financial practice - I would not have sold to them if I did not trust their ethics. They, in turn, send their investment clients with tax questions to me.
What goes around, comes around. There is no reason to muddy the waters.
Playing devil's advocate- I've never asked for nor accepted a referral fee from anyone, but does the rule to disclose still apply if you're not a member of the AICPA but are a CPA?
Thank you for this article. I dealt with a colleague who would send me referrals, she did not prepare taxes, and wanted a “finder’s fee”. I automatically said that I do not pay referral fees. I never expected anything in return for the referrals I sent out.
I completey agree with you Tom! A referral to a professional who has the expertise one does not possess is you looking out for your client in good conscience. The “compensation” here is your integrity shines, makes your client trust you more, and maybe that leads to more word-of-mouth referrals. But the goal here is to make sure your client gets good advice. What a shame you had this experience! Hope at least some of those who approached you & asked for a referral fee are reading this article!
Consider a bit of a wider issue. I referred a client to someone for a cost Segregation study. They did a great job and everyone was happy with the results. The client paid for the study directly and I incorporated it into the clients tax return. Then as a surprise to me, I get a email from the cost seg company that says I am due a referral fee. Do I tell the client and pass the fee on to the client?
GREAT article and I 100% agree with all your points here. When I refer my clients to a Trust/Estate Attorney or to a Financial Advisor who I know will take good care of them, It is not with the expectation that I get anything in return other than more excellent service for my client. My clients truly understand that I am their Trusted Advisor. And my referral sources understand that I provide excellent service, so I am a safe place to refer THEIR clients. (applause, applause for this article!!)
Completely agree. Not only is it scarcity mentality but with all the hype and focus on passive income everyone wants to be paid and not do any work. I don't have any affiliate links and I don't take revenue share from software like QBO or gusto either. I want to look at a client and tell them the person or software I'm recommended is because I believe it's best for them and for them to have zero reason to question my recommendation or the motivation behind it.
When it's another professional, I feel like they're doing me a favor by taking the client. I certainly don't expect to be compensated when they're helping me out by covering an area for a client I don't or can't cover.
I am immediately suspicious when someone "offers me a client" but wants a fee. It just feels slimy, and I would rather not go there.
I routinely refer tax clients with investment questions to the firm that bought my financial practice - I would not have sold to them if I did not trust their ethics. They, in turn, send their investment clients with tax questions to me.
What goes around, comes around. There is no reason to muddy the waters.
Playing devil's advocate- I've never asked for nor accepted a referral fee from anyone, but does the rule to disclose still apply if you're not a member of the AICPA but are a CPA?
I can't speak to the CPA license, but your state board may have a rule.
Thank you for this article. I dealt with a colleague who would send me referrals, she did not prepare taxes, and wanted a “finder’s fee”. I automatically said that I do not pay referral fees. I never expected anything in return for the referrals I sent out.
I completey agree with you Tom! A referral to a professional who has the expertise one does not possess is you looking out for your client in good conscience. The “compensation” here is your integrity shines, makes your client trust you more, and maybe that leads to more word-of-mouth referrals. But the goal here is to make sure your client gets good advice. What a shame you had this experience! Hope at least some of those who approached you & asked for a referral fee are reading this article!
Makes sense - they were looking to refer and, in the conversation, demonstrated that their competency was not there. (Tongue is in cheek.)
Consider a bit of a wider issue. I referred a client to someone for a cost Segregation study. They did a great job and everyone was happy with the results. The client paid for the study directly and I incorporated it into the clients tax return. Then as a surprise to me, I get a email from the cost seg company that says I am due a referral fee. Do I tell the client and pass the fee on to the client?
If you accept the money, and you are an EA or CPA, you need to disclose it at a minimum. You could also turn it down.
I just turn them down when offered. Corpnet offered me something a while back and when I turned it down they gave it back to the client.
I agree with you 100% Tom!
May I suggest that next time you are asked what the referral fee will be, you answer a $25 gift card.
:-)