guide to gifting - AE Leads the Way

guide to gifting - AE Leads the Way

GUIDE TO GIFTING Typically on AE Material that discusses giving gifts to clients you see this disclosure: Federal law, state law and/or insurance carr...

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GUIDE TO GIFTING Typically on AE Material that discusses giving gifts to clients you see this disclosure: Federal law, state law and/or insurance carrier requirements may prohibit or place limitations on marketing activities. All producers and investment advisors should be aware of any gifting limitations imposed by federal regulation, state regulation, insurance carriers, broker-dealers and Registered Investment Advisors, as applicable. Investment advisors are strongly encouraged to obtain pre-approval from the broker-dealer and/or Registered Investment Advisor with which they may be affiliated. We wanted to provide some additional clarity on the subject of gifting and have created this document for that purpose. There are substantial differences between the insurance standard and the securities standard(s). If you are an insurance only producer, you must abide by your state’s insurance guidelines. If you are a dually licensed producer, you must abide by BOTH the insurance and securities rules and regulations that apply to the practice of gifting; while broker-dealer/ FINRA securities regulations allow for gifts of up to $100 per year per client (a guideline many RIA firms abide by as a best practice), the state insurance standard may be lower and or more specific and should always be taken into consideration. Most State insurance rules and regulations expressly prohibit rebates or inducements. Rebates are generally defined as: because you bought an insurance contract you get this, and inducements are generally defined as: I will give you this if you buy an insurance contract. The general prohibition on inducements will likely not significantly impact any gifts you would like to give clients so long as they are not a quid pro quo for the purchase of a product. However, there are states which place limits on the value of merchandise or “token gifts” which may be given out for advertising purposes, even if the items contain the firm’s logo. There are a small number of states that place a dollar amount on the value of “gifts” or “social courtesies” a client can receive per year from the agent/firm. Depending on the State, this can range from $25-$100/year. Additionally, some states set a dollar limit on the value of meal and or refreshments provided during a sales presentation, and or include the dollar amount of the meal in the total dollar amount of “valuable consideration” that can be given to a client in a given year. If the sale of an insurance product is contemplated or involved in your sales practice, you will need to adhere to the lower of the two standards for gifting, either insurance or securities. For example, if the state insurance gifting limit is $25 per year per client and you utilize a mixture of investments For financial professional use only. Not to be used with the general public or in a sales situation.

and insurance products for your clients then you will need to adhere to the lower state limit of $25 as opposed to the higher $100 securities limit. On the topic of securities limits, we want to clarify any confusion surrounding logoed items. FINRA guidance states that logoed items do not count towards the $100 per year limit as long as the gifts are of de minimis value. For example, pens, notepads, or promotional items of nominal value that display the firm’s logo, such as umbrellas, tote bags, shirts, are considered de minimis in value. In order for an item to fall within the exclusion, its value must be substantially below the $100 limit. Gifts with value at or around $100 are not nominal and, accordingly, do not qualify. According to FINRA, examples of items that are not considered of nominal value and as such, do not qualify for exemption, include leather luggage or crystal pieces with logos. Please keep these limits in mind when establishing your gifting practices and feel free to utilize the resources on the topic of gifting on the website: or contact the AE Compliance Department with any questions. We want to help you keep your practice safe.