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Referrals are a sign of client trust and loyalty and can be integral to your business’s long-term growth. Encouraging client referrals begins with delivering top-notch service that exceeds expectations, but it doesn’t stop there. Offering gifts is a powerful way to incentivize clients to continue referring their friends, family members and coworkers to your firm.
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Can Advisors Send Gifts for Referrals?
Financial advisors can offer gifts to clients in exchange for referrals. There are, however, some restrictions on client gifts.
FINRA Rule 3220 limits gifts to $100 per person, per year for broker-dealers. The rule is worded as follows:
“No member or person associated with a member shall, directly or indirectly, give or permit to be given anything of value, including gratuities, in excess of one hundred dollars per individual per year to any person, principal, proprietor, employee, agent or representative of another person where such payment or gratuity is in relation to the business of the employer of the recipient of the payment or gratuity. A gift of any kind is considered a gratuity.”
A proposal was put forth in 2016 to raise the gift limit to $175 but that was sidelined to allow the SEC time to work out the nuances of Regulation Best Interest (Reg BI). Whether FINRA will revisit the increased limit is yet to be determined.
The Securities and Exchange Commission (SEC) expects registered investment advisory firms to develop gifting policies as part of a code of ethics. Gifting policies must align with fiduciary duty standards and must not encourage conflicts of interest, misconduct or fraud.
Creative Referral Gifts for Clients
Deciding what to gift clients within the $100 annual limit allowed by FINRA can be challenging. Ideally, the goal is to offer a gift that’s meaningful and thoughtful, includes an individualized touch and will encourage the recipient client to continue sending referrals your way.
With that in mind, here are some inspiring ideas for referral gifts for clients.
Functional Gifts
Functional gifts are often appreciated when tailored to the recipient’s needs or interests. Offering practical and thoughtful referral gifts allows financial advisors to demonstrate how well they understand their clients.
Popular ideas include sharing a favorite book, particularly one related to financial planning, or providing items such as portable phone chargers, coffee or tea samplers, mug warmers, or subscription gifts like fitness trackers, magazines, or e-readers.
Other options might include phone stands, reading lights, or essential oil diffusers. Gourmet food baskets, barbecue or grilling sets, gardening tools, or even a fireproof safe can also make memorable and functional gifts.
Seasonal gifts provide an opportunity to engage clients throughout the year. For example, you could present a cozy blanket during winter months or a selection of fruit-infused teas paired with a diffuser in the summer. This approach not only keeps your gesture budget-friendly but also creates opportunities for regular, meaningful client interactions.
Luxury Gifts
Luxury gifts can elevate your client appreciation efforts, and it’s possible to find premium items at an affordable price point.
Upscale options include cocktail glasses, designer wallets, money clips, card cases or wristlets that reflect sophistication. Skincare sets, craft beer brewing kits or elegant picture frames can also make a lasting impression. Other options might include wine, decorative pillows, salt and pepper cellars, designer trinket trays, cufflink sets, tie clips or leather travel cases.
Enhancing these gifts with stylish gift wrapping and a handwritten note on quality cardstock adds a personalized, high-end feel that emphasizes your appreciation.
Branded Gifts
Selecting branded gifts that clients will use repeatedly can help keep your firm top of mind. To create branded merchandise, work with a manufacturer capable of incorporating your firm’s logo onto various products. Purchasing items in bulk may help reduce production costs, allowing you to provide these memorable and functional gifts more efficiently.
Practical items like drinkware, including coffee mugs, wine glasses or reusable water bottles, can be both functional and visually appealing.
Notebooks, pens and other stationery are classic options for branding. Tech-related gifts, such as headphones, earbuds or Bluetooth speakers, offer modern utility, while personal care items like lip balm or hand lotion can provide a thoughtful touch.
Other popular branded merchandise includes tote bags, backpacks, laptop sleeves, mousepads and even camping chairs for outdoor enthusiasts.
Experience Gifts
Experience gifts provide clients with unique opportunities to enjoy activities they might not typically pursue, creating lasting memories and demonstrating thoughtfulness. Wine tastings can offer a sophisticated and enjoyable outing, while private cooking lessons with a professional chef add a personal and interactive touch. Golf lessons with a local pro or horseback riding lessons cater to clients with an interest in outdoor or recreational activities.
Meanwhile, tickets to sporting or cultural events provide a chance for entertainment and enrichment. Other creative ideas include hot stone massages for relaxation, paintball sessions for adventure, escape room experiences for team challenges or even helicopter tours for a thrilling and scenic experience.
Additionally, you might consider group events, such as client dinners or a day at an amusement park. Remember to ask about discounts if booking an event for a large party.
Tips for Client Gift Giving
Implementing a client gift-giving program or fine-tuning an existing one could give your business a significant boost if you’re able to generate a steady stream of referrals. Here are a few final tips to ensure your program is operating smoothly and in compliance with regulatory guidelines.
- Keep accurate records of client gifts, including what was the gift and when, who the gift went to and the dollar amount of the gift.
- Remember that for FINRA purposes, the value of a gift is based on cost or market value only.
- Determine how much of your firm’s budget you’ll allocate to client gifts per year (1% to 2% of annual revenues may be a good starting point).
- Decide if you’ll offer the same gifts to all clients or base gifting on the number of referrals clients generate.
- Consider surveying clients to ask what types of gifts they would most like to receive.
Here’s one more tip: use software to ensure gift-giving compliance. Some platforms work with financial advisors to create and execute gift-gifting programs in compliance with applicable regulatory guidelines. Working with such a platform can relieve the pressure of trying to find the perfect gift idea, leaving you free to focus on serving your clients.
Frequently Asked Questions
What Is a Referral Gift?
A referral gift is a gift someone receives for referring another person to a business. Financial advisors can offer referral gifts to clients, as long as those gifts are within regulatory guidelines.
What Are Some Effective Ways to Get Client Referrals?
Encouraging clients to refer people to your business begins with delivering superior service. The more satisfied a client is the more likely they are to tell other people about your firm. You can also ask clients for referrals directly or offer incentives for referrals in the form of client gifts.
How Much Can Advisors Give for Referral Gifts?
FINRA limits financial advisors to offering client gifts valued at $100. This is an annual limit and applies per client.
Bottom Line
If you’re stumped about what to give clients for referrals the ideas listed above can be a suitable place to start. Remember, you’re not required to offer client gifts for referrals but doing so can add another layer to your marketing plan.
Tips for Growing Your Advisory Business
- Marketing is a critical activity for any advisor, but it can be time-consuming and sometimes difficult to navigate as you test out different strategies. Working with an advisor marketing platform can save time and eliminate some of the trial-and-error that often goes along with promoting your business. With SmartAdvisor, you can connect with qualified leads, and you’ll have all the tools you need to follow up quickly.
- Separate rules apply to gifts given by a client to a financial advisor. Officially, FINRA prohibits client gifts to advisors above $100. However, some firms may cap gift amounts even lower or disallow client gifts to advisors entirely.
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