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November 26, 2020 at 09:39 AM
Related: 11 Nifty Holiday Gifts for Clients Under $100 (Sorry, FINRA)
Many financial advisors see the holiday season as an opportunity to bolster client relationships with a greeting card or even a small gift.
It’s the same this year — even as the coronavirus pandemic has made this holiday season different from any in living memory. Providing clients personalized service has become increasingly important in the competition for new relationships and certainly to clients themselves.
However, advisors have to keep in mind that they are constrained in their gift-giving by rules and guidelines from the Securities and Exchange Commission and the Financial Industry Regulatory Authority.
FINRA generally prohibits advisors from giving gifts in excess of $100 per individual, per year. There are exceptions for personal gifts — for example, a wedding gift — provided that these are not “in relation to the business of the employer of the recipient.”
Gifting by RIA firms is most often regulated by reference to the antifraud provision of the Investment Advisers Act and the fiduciary duties an advisor owes to clients.
It is common for RIAs to loosely adopt the FINRA rule for broker-dealers, Rule 3220, which must be adhered to if the firm contains bill registrants. RIAs can set a nominal value higher than $100, but should have guidelines around this practice.
According to Deloitte, this year’s holiday retail sales should increase between 1% and 1.5%, amounting to between $1.147 trillion and $1.152 trillion during the November-to-January period, compared with growth of 4.1% in 2019, when sales were nearly $1.14 trillion.
See the gallery for some gift ideas — all under $100.
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