Guidance on Receiving Gifts

Can you safely accept a gift from a client or service provider? A potentially ticklish problem in many business situations, it's particularly acute for those financial professionals who are "fiduciaries" - a legal term that covers many jobs related to managing or administering pensions and other group retirement plans.

Some useful tips appear in a recent post on fi360, the blog of Fiduciary360, an organization that provides education and training for investment fiduciaries. The post's author, Rich Lynch, while not an attorney, is fi360's chief compliance officer and holds an AIFA (Accredited Investment Fiduciary Analyst) designation.

The key question any fiduciary should ask himself or herself when considering whether to accept a gift, Lynch writes, is "whether they believe it will impair their ability to carry out their duties objectively."

He cites Employee Benefits Security Administration guidance that focuses on whether a fiduciary received gifts or gratuities for his personal account "in connection with a transaction or transactions involving the assets of the plan." Officials investigating possible fiduciary violations also look at whether an individual adhered to his employer's "reasonable written policy or plan provision" dealing with accepting items or services from parties dealing with the plan.

Lynch ticks off three elements of an employer's typical gift policy:

- maximum monetary value ($200-$300 seems reasonable)

- banning gifts such as high-profile sports events like the Super Bowl or World Series

- requiring record-keeping of all gifts received (but this doesn't mean recording someone buying you an "occasional" lunch).

"Most policies would allow gifts of a nature that could not reasonably be interpreted as influencing decisions as a result," Lynch advises. "So, in general, think fruit baskets, rather than Final Four tickets."

Also, to ensure that the policy passes muster with ERISA and other laws, always consult legal counsel when drafting policies on gifts.