RIA Referral

[dczech09]

Hey I have a potential situation that I am researching. I am a financial wellness service provider. I do not sell any financial products, and thus I am not registered or licensed (no need to be).

There is an RIA in town who works with businesses and advises on 401ks. A client of the RIA is looking for an educational component to the financial services, and the RIA is thinking about referring the client to me.

However, if I start doing work for the client company, the RIA would like their "cut" for getting me the referral. And I am on board that they should be compensated for the referral.

My question is if there is anything wrong with this arrangement? May be something that I am missing. While they are registered, I am not. However, it is not me that is receiving the referral fee or "commission" - it is them.

Under normal circumstances where it is the RIA that is paying an outside solicitor, their are several rules and regulations. However, in my situation, it is all reversed.

Ultimately, I want to ensure that everything is on the up and up.

[Nutria]

I am a financial wellness service provider.

What's that? I googled, but found nothing but content-free goo.

Ultimately, I want to ensure that everything is on the up and up.

Are you asking whether it's in the RIA Code of Ethical Conduct (HAHAHAHAHAHAHAHAHAHAHA) for RIAs to take referral fees from unregistered professionals?

[dczech09]

Are you asking whether it's in the RIA Code of Ethical Conduct (HAHAHAHAHAHAHAHAHAHAHA) for RIAs to take referral fees from unregistered professionals?

I sense sarcasm. So in other words I need to be registered in order to give them a commission for a lead they give me? Is that the same for attorneys, CPAs and other professionals who aren't normally registered with the SEC?

[Nutria]

I sense sarcasm.

Only in the thought that investment professionals have ethics.

So in other words I need to be registered in order to give them a commission for a lead they give me? Is that the same for attorneys, CPAs and other professionals who aren't normally registered with the SEC?

I sure don't know... (And this probably isn't the best forum on which to ask.)

[dczech09]

I sure don't know... (And this probably isn't the best forum on which to ask.)

Probably not. But I figured I would at least check. According to what I have been reading, the RIA would have to disclose the arrangement on their ADV. I don't need to be registered as I am not the one receiving the referral fee or "commission."

[disneysteve]

I am a financial wellness service provider.

What does that mean?

[dczech09]

What does that mean?

I provide personal finance education and guidance as a workplace benefit. Just like companies such as Financial Finesse and 8 Pillars. The industry is relatively new and is very much in its infancy, but is growing in popularity.

[kork13]

Probably not. But I figured I would at least check. According to what I have been reading, the RIA would have to disclose the arrangement on their ADV. I don't need to be registered as I am not the one receiving the referral fee or "commission."

As far as you're concerned, it should be a non-issue... You aren't responsible for your RIA friend following whatever ethical code he might be responsible to. In any case, the most I see being required is for the client to sign an acknowledgement (or a disclosure amendment) stating that the RIA is receiving a referral fee from you. Likewise, you can disclose to the client that you paid said referral fee. But again, not necessarily required, as I'm guessing that (given the small, niche industry) you're not bound by a stated ethical or fiduciary standard.

BL: Be upfront with the client about the arrangement, but I wouldn't be overly concerned by it. You're an educator, which has significantly different (fewer) restrictions & regulations than financial advisors/salesmen/etc.