Why is it generally NOT a good idea to form a simple relationship with a financial services firm under which I am paid a referral fee for each client whom I refer?
Per-client referral fee arrangements fall into a risky “gray area” of the AICPA’s Code of Conduct. They may violate insurance laws of many states that prohibit commission-sharing with non-licensed people, and they also are subject to CPA ethics rules that require client disclosure of compensation. The line between referrals and commissions, as drawn by lawmakers and regulators, isn’t always clear. In any case, small per-case referral fees usually do not produce enough revenue for CPAs to warrant their effort and risk in financial services expansion.
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