CPAs and accountants: AICPA ET 1.520 and state boards
The AICPA Code of Professional Conduct addresses commissions and referral fees in ET 1.520. In general terms, a member in public practice may not accept a commission for recommending a product or service to a client when the firm performs certain attest services for that client, such as audits or reviews. Where commissions are permitted, they must be disclosed to the client. Referral fees, whether paid or received for recommending services, must also be disclosed.
State boards of accountancy set their own rules, and some are stricter than the AICPA, with specific written disclosure requirements or tighter limits. Firm policy can be stricter still. Bookkeepers who are not CPAs are usually less regulated, but engagement letters and any firm they subcontract for may restrict referral compensation. If you hold a CPA license, check your state board's rules before relying on the AICPA standard alone.
Attorneys: state bar rules modeled on ABA Model Rules 7.2 and 5.4
Lawyers are regulated by the bar in each state where they are licensed, and most state rules are modeled on the ABA Model Rules of Professional Conduct. Two rules come up most often. ABA Model Rule 7.2 generally prohibits a lawyer from giving anything of value to a person for recommending the lawyer's services, with limited exceptions. ABA Model Rule 5.4 generally prohibits sharing legal fees with nonlawyers.
A lawyer receiving a referral fee from a non-legal business, such as a technology provider, raises a different question. State bars typically analyze it under conflict-of-interest rules and ethics opinions, which often focus on whether the lawyer's independent judgment is affected and whether the client gives informed consent after disclosure. Some states permit it with conditions; others are more restrictive. Check your state bar's ethics opinions or call its ethics hotline before accepting anything.
Financial advisors, real estate and insurance professionals
Each of these fields has its own regulator and its own trigger point.
- Financial advisors: registered representatives generally must notify their broker-dealer in writing before engaging in outside business activities, and the firm may limit or prohibit them. Investment adviser representatives answer to their firm's policies and fiduciary obligations, including conflict disclosure. Get written firm approval first.
- Real estate and mortgage professionals: RESPA Section 8 prohibits giving or accepting fees, kickbacks or things of value for referrals of settlement service business involving federally related mortgage loans. Referring a client to a business service unrelated to the transaction is a different matter, but state license law and your broker's policies may still apply. Ask your broker.
- Insurance agents: state insurance laws commonly restrict paying referral fees to unlicensed people for insurance sales and prohibit rebates or inducements. Rules vary by state, and carrier contracts may add more. Referring a client to a non-insurance business service is generally treated differently, but confirm with your state insurance department or compliance team.
Healthcare professionals: never patient referrals
Healthcare has the strictest rules for good reason. The federal Anti-Kickback Statute makes it a crime to knowingly and willfully offer, pay, solicit or receive anything of value to induce or reward referrals of items or services paid for by federal health care programs such as Medicare and Medicaid. Physicians are also subject to the federal physician self-referral law, commonly called the Stark Law. Many states have their own anti-kickback and fee-splitting laws, some covering all payers, and licensing boards add professional standards.
For nurses, physicians, therapists, dentists and practice staff, the safe pattern is clear. Never refer patients for compensation, never share protected health information, and do not refer vendors to your own employer or to practices that send you patients without compliance approval. Referring a practice owner to a business service the practice buys for itself is a different activity, but your employer's compliance office should still hear about it first.
Employees, creators and everyone else
If you are employed, your employer's policies may matter more than any regulator. Read your moonlighting or outside-activity policy, your conflict-of-interest policy and any non-compete or non-solicit agreement. Never refer your employer's customers, use company time, tools or data, or refer products that compete with your employer.
If you recommend products publicly, as a speaker, author, podcast host or LinkedIn creator, the FTC Endorsement Guides expect you to disclose a material connection, including a commission, clearly and close to the recommendation. Association leaders and board members should follow their organization's conflict-of-interest policy, which usually means disclosure and recusal.
Habits that work in every profession
Whatever your field, a handful of habits keep a partner referral fee clean. Random Income builds its program around them, because compliance awareness by profession is part of what makes a Strategic Partner credible. Every Strategic Partner is a 1099 independent contractor, never an employee, and refers business clients to business services, never patients.
- Confirm your rules before your first referral, in writing where you can.
- Disclose the relationship to every person you refer, every time.
- Refer only when the service genuinely fits the client's needs.
- Keep confidential client information out of every referral.
- Keep records of approvals, disclosures and introductions.
- Revisit your rules when you change firms, licenses or states.
Questions to put to your regulator, firm or counsel
Ethics hotlines, compliance officers and attorneys give better answers to specific questions. Before you call, describe the arrangement plainly: you would introduce business clients 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, as an independent contractor. Then ask the questions that matter for your field.
- Am I allowed to receive compensation from a third party for recommending its services to my clients?
- Does it matter whether the client also receives regulated services from me, such as attest work, legal representation or investment advice?
- What form of disclosure is required, and does it need to be in writing or signed by the client?
- Do I need prior written approval from my firm, broker, employer or board?
- Are there clients or categories I should exclude entirely?
- What records should I keep, and for how long?