The short answer, explained
The phrase is most closely associated with the securities industry, where it is often shortened to OBA. Broker-dealers supervise the people registered with them, and they need to know about anything those people do for compensation outside the firm. The reason is practical: an outside role can create conflicts of interest, confuse clients about who they are dealing with, or become a channel for activity the firm cannot supervise.
In general terms, FINRA rules require a registered person to give their member firm prior written notice before engaging in an outside business activity for compensation, and the firm evaluates whether to allow it, restrict it or prohibit it. FINRA has been reviewing and updating its approach to outside activities, so the current requirements should always be confirmed with your firm's compliance department. Investment adviser representatives usually face similar expectations through their firm's compliance manual and fiduciary obligations, including disclosure of material conflicts.
Outside finance, the same idea appears under other names: moonlighting policies, secondary employment rules, conflict-of-interest disclosures and board-service approvals.
What usually counts as an outside business activity
Firms define the term broadly, and when in doubt the safer assumption is that an activity counts. Common examples include the following.
- Paid consulting, advising or fractional executive work for another company.
- Serving on a board of directors or advisory board, paid or sometimes even unpaid.
- Owning or operating a side business, including a holding company or rental business.
- Earning referral fees or commissions from a third party, including a referral partner program.
- Teaching, speaking, writing or creating content for compensation.
- Holding a role with a nonprofit or association, depending on the firm's policy.
Outside business activity disclosure: the it-depends factors
How disclosure works depends on your role, your registrations and your firm. Some firms want a short form and a manager's sign-off; others require a detailed description, an estimate of hours and compensation, and annual re-certification. Some prohibit specific categories outright, such as any activity involving the firm's clients or any compensation from product sponsors. Others approve with conditions, for example no use of firm time, systems or client data, and no mention of the firm in the outside activity.
Who your outside activity touches matters too. A referral relationship that involves your firm's clients deserves extra scrutiny, because clients may assume your recommendation carries the firm's endorsement. Activities involving securities or investment advice outside the firm raise separate and stricter issues and are a different matter entirely. And employees outside regulated industries are not off the hook: their handbook, offer letter or non-solicit agreement may impose their own approval requirements. This page is general information, not legal or compliance advice; ask your compliance department, manager or attorney about your situation.
How Random Income fits the outside business activity process
For professionals who are registered or employed, a Random Income partnership is typically something to submit as an outside business activity before referring anyone. Strategic Partners are 1099 independent contractors, never employees, who introduce businesses to business technology and marketing services. The offers are not securities, not investment advice and not insurance products, and they should never be presented as part of the firm's services.
When you describe the arrangement to compliance, be plain: you would introduce business owners to a third-party technology or consulting provider, the provider handles the sale and delivery, and you would receive a commission if the client buys. Commission on stack products is a percentage of retail calculated on redline, 20% when the client buys fully online untouched and 12% when an in-house rep works the deal, and Random Income issues a 1099-NEC. Then wait for written approval. Our page for financial advisors goes deeper on firm approval, client conversations and when an advisor should not participate.
Common mistakes with outside activities
The most serious mistake is starting first and asking later. Approval that arrives after the activity began does not erase the period when it was undisclosed. The second is under-describing the activity, calling a commission arrangement a hobby or leaving out that clients of the firm may be involved. The third is assuming an unpaid role does not count; many firms want to know about board seats and advisory roles regardless of pay.
Other mistakes are practical. Using a firm email address, firm devices or the firm's client list for an outside activity is a common reason approvals are revoked. Forgetting to update the disclosure when the activity changes, such as a new partner program or a larger time commitment, is another. And keeping no records makes an otherwise clean history hard to prove.
How to describe an activity to your compliance team
Compliance reviewers approve clear requests faster than vague ones. Describe what you would do in a few plain sentences: who you would work with, what you would provide, how you would be paid and how much time it would take. Say whether any of the firm's clients could be involved and how you would keep the activity separate from your role. Mention that you would not use firm time, email, devices or data.
Then ask the specific questions that matter: whether the activity is permitted, what conditions apply, what disclosure clients should receive, and how often you must re-certify. Keep the approval and any conditions in writing, and diary a reminder to update the disclosure if the activity changes. A short, honest description at the start is far easier than explaining an undisclosed activity later.