Should an advisor keep, credit to the client or decline a referral fee?

Which option fits: keep, credit or decline?

For most advisors the choice comes down to one question: does the rule that governs your profession, or your engagement letter, allow you to receive the reward at all? If it does and you disclose it, keeping it at firm level is the simplest path. If your firm wants the client to see zero financial interest in the introduction, crediting or declining removes it. If the rule or your firm's policy prohibits the reward, decline it before you register.

Pick before the first introduction, not after a deal closes. The SourceX reward is a share of SourceX's fee. It is never deducted from what the company receives, so none of the three options changes the company's price. They change who benefits, who knows about it, and what you have to document.

Keep, credit or decline: side-by-side comparison

Whichever you choose, no reward is guaranteed. Rewards are payable only after the buyer pays and SourceX receives its fee, and an introduction, meeting or signed agreement alone does not trigger payment.

What rule text drives each choice?

The rule decides before preference does. Three families of rules come up most for advisors.

• CPAs. The AICPA Code's commissions and referral fees rule (ET 1.520) bars a member from accepting a commission for recommending a product or service to a client when the member or firm also performs certain attest work for that client, and permitted commissions and referral fees must be disclosed. Read the current text in the AICPA Code of Professional Conduct and the companion page on attest vs non-attest clients.
• State boards. A state board of accountancy can be stricter than the AICPA Code, as the New Jersey Society of CPAs summary illustrates. Your state rule controls.
• Lawyers. Fee-division and nonlawyer fee-sharing rules differ by state. The ABA's Rule 1.5 variations chart is a starting point, but a lawyer should read the rule where they are licensed.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

When does keeping the reward make sense?

Keeping is the default when your rules permit referral compensation and your client relationship is advisory rather than restricted. It treats the reward as payment for work you did: identifying and introducing a fit company.

Use the disclose, document, decide test:

• Disclose: the client gets a written note before the introduction that says you may receive a reward from SourceX if a deal completes.
• Document: the note names the source of the reward (a share of SourceX's fee) and states that it does not reduce the client's proceeds.
• Decide independence: a named partner confirms in the file that the engagement does not fall into a restricted category.
• Record the client's choice: the client may proceed, ask you to step back, or apply directly at sourcex.si/apply without your referral link.

Keeping works poorly when the client is an audit or review client, when your engagement letter promises objectivity on transactions, or when you cannot explain the arrangement in two sentences.

When does crediting the reward to the client make sense?

Crediting suits a firm that is permitted to receive the reward but wants to show the client it is not the motive. The mechanics are simple: the firm agrees in advance that any reward received will reduce a named future invoice, up to an amount the engagement letter states.

Three cautions apply. First, crediting does not replace disclosure; the client still needs to know the reward exists. Second, a credit changes your accounting and tax picture, so ask your tax adviser how the firm records the reward and the credit. The IRS notes on Form 1099-NEC reporting are a starting point for what payers report, and thresholds change by year. Third, never promise a credit amount in dollars before a deal exists; the reward depends on a completed deal and is capped.

When should an advisor decline the reward?

Decline when the rule forbids it, when your firm's policy is silent and you would rather not test it, or when the relationship is too sensitive for any financial interest. Declining is also the right move if your client would read a reward as a conflict, even a permitted one.

Declining does not mean you cannot help. You can still point the owner to the company fit checker, or tell them about sourcex.si/apply so they can apply without a referral link. Put a short note in the file: date, what you told the client, and that you did not register or did not accept compensation.

What about donating a reward?

Some advisors consider giving a reward to charity or to staff. This is a variant of keeping, not of declining: the firm still receives the reward first, and the firm's tax and ethics position follows from that receipt. If your goal is to avoid any benefit from the introduction, decline in advance rather than receiving and redirecting. Discuss any donation approach with your adviser before you register.

How do I choose in practice?

1. List the clients you would realistically introduce and tag each as attest, non-attest or non-professional-service.
2. Read your professional rule and your state version, and ask your compliance contact for the firm's position on referral compensation.
3. Pick one policy per client category, not one per deal, so the answer is consistent when a second introduction arrives.
4. Put the policy in the engagement letter or a one-page disclosure.
5. Revisit the policy when rules change. For example, a firm that sits in a PE-owned platform may have fee-offset terms to check as well.

Compare this with the referral partner vs affiliate partner page if your firm is deciding what kind of relationship to enter, and with revenue share vs referral fee for how the reward is structured. The program terms explain how rewards are handled, and the who qualifies page lists which companies are worth introducing at all.

Common mistakes

Next step

Pick your policy, write it down, then register as a partner. Read the guide to estimating referral earnings in a client conversation before you discuss the reward with a client, and see the accountants hub for how other practices handle introductions.