How to set a referral fee policy for your advisory firm

How do you set a referral fee policy for an advisory firm?

Write down five decisions: who keeps the fee, which clients and engagements are excluded, what must be disclosed and to whom, who approves each introduction, and how the firm records it. A one-page policy that answers those five is more useful than a ten-page one nobody reads.

This guide is aimed at CPA, fractional CFO and M&A boutique firms, where the introduction goes to a client who relies on the firm's independence. If you are a sole practitioner, the same logic applies; you simply wear every hat. The accountants and bookkeeping firms page explains where data licensing fits for those practices.

Why should a firm write the policy before the first introduction?

The first request almost always arrives on a deadline: a client mentions an idea, a partner sees an opportunity, and a decision gets made in a hallway. A policy turns that moment into a lookup.

It also separates three questions that people tend to blur: whether the firm may accept compensation, whether this client may be introduced, and whether this specific introduction is a good idea. The answers can differ.

What do professional rules say about referral fees?

Rules vary by profession and by state, so treat this section as pointers, not conclusions. For CPAs, the AICPA Code of Professional Conduct contains provisions on commissions and referral fees (section 1.520) and contingent fees; in broad terms these restrict compensation connected to clients for whom the firm performs certain attest services, and they call for disclosure of permitted referral fees. State boards can be stricter than the AICPA Code, as the New Jersey Society of CPAs resource on commissions and contingent fees illustrates.

Lawyers, broker-dealer representatives and registered advisers have their own rules. This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting, and write the result into the policy.

What are the policy decisions, and what are the common options?

The guide on making an introduction when you can't accept a referral fee covers the decline option in detail.

How do you write the policy in practice?

1. State the principle. One sentence: the firm's advice to clients is not influenced by compensation from third parties.
2. Define a referral. Any introduction of a client or contact to a third party where the firm or a person in it could receive anything of value.
3. List exclusions. Engagement types and client categories where the firm will not accept compensation, based on your professional rules.
4. Set the approval step. Name the role, not the person.
5. Set the disclosure step. Written, plain language, before the introduction goes out, and repeated in the introduction itself.
6. Set the money path. Where payments are received, who reports them and how they are recorded for tax.
7. Set the review cycle. Once a year, or when professional rules change.

What goes in the referral register?

• Date of the client's permission and a copy of it.
• Client or contact, and the third party introduced.
• The program and the reward terms as of that date, noting that a reward depends on events outside the firm's control.
• Name of the approver and date of approval.
• Copy of the disclosure sent.
• Outcome, including a decline or no response.

This also helps if a credit question arises, which the guide on proving a referral discusses.

How does SourceX's reward model fit a firm policy?

Understanding the economics keeps the policy realistic. Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed.

Because rewards arrive only after a completed and paid deal, they are an unreliable basis for budgeting or staff incentives. The reward is a share of SourceX's fee and is never deducted from what the company receives, which helps the disclosure conversation. For the structural options other programs use, see B2B referral fee structures and the fee base question. For the contract side, read what a referral fee agreement is and whether rewards apply to repeat deals.

Who needs to read the policy?

A policy only works if the people who face clients know it exists. Circulate it to every partner and manager, include it in onboarding, and name one person who answers questions. Add a short line to engagement letters or client communications if your rules require disclosure of third-party arrangements. Revisit it whenever your professional bodies update their rules or a program changes its terms.

What should a staff member say when a client asks?

What are the common policy mistakes?

Next step

Draft the one-page policy this week and have your risk partner or counsel review it. When it is approved, register as a partner if your rules allow it, and use the introduction email builder. See how it works for the process your clients will experience. Sizing up a candidate company first? The guide to finding a private company's employee count and peak headcount helps.