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Commission sharing agreement

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Apr 20, 2009 1:39 am

I received a very nice referral from an attorney a couple weeks ago and while I was visiting with him last night at a party, he said it was comforting to have someone in the investment business that he trusted and could send his clients to without having to worry about how they would be treated.

He said he and his partner had several other big cases in the pipeline and he'd be sending them my way. He said that at some point he'd like to discuss a way to "structure a deal." It was obvious he was referring to some type of commission sharing situation.   I'm fine with that, but can't do it at Jones. Do any of you indies have agreements in place with attorneys and CPAs?
Apr 20, 2009 3:43 am

I don’t, but LPL will allow us to. However, the attorney (or CPA, sports agent, etc.) would need to have the proper license (I think the 66 or the 65 would do). Otherwise, I don’t think you’re legally allowed to share revenue.  But I could be wrong.

Apr 20, 2009 12:49 pm

I remember reading about this when I was studying for the 66.

  I know it's legal if done correctly, and I thought it was more of a disclosure issue than a licensing issue on the part of the CPA or attorney.
Apr 20, 2009 1:21 pm

Yes. Good point.

Apr 20, 2009 10:17 pm

you can pay them a referral fee, but it cannot be based on the size of the case itself.  i have an arrangement in place with a few cpa’s, drawn up by my home office (or should i say approved by them) and it is a flat fee per referral.  you cannot, by rule, pay them a higher referral fee for a larger case.  all this is moot of course, if they get licensed, or are licensed.  then they can participate directly in the revenue.

Apr 28, 2009 7:28 pm

What state are you in?  I am trying to set up a similar arrangement but am having issues with California law.

Apr 28, 2009 7:48 pm

As stated before, the professional would need to be 66 licensed, and the client would have to sign a disclosure form at the time of referral (and given an ADV Part II) by the professional.  The disclosure outlines the agreement between you two, and how much money the lawyer/CPA would get if they became a client (in bps from the annual fee).

  It seems like a weird situation to me:   "Mr. Client, let me recommend my good friend at XYZ Firm to assist you in your investment needs.  By the way, I will earn 0.10% off of the annual fee, and here is a disclosure document.  Now just sign here on the X."