A referral income guide for accountants: from introduction to commission statement

Every January and every year-end, the same conversations surface. A director with £250,000 of retained profit asks whether dividends or pension contributions make more sense. A retiring sole trader asks what to do with the sale proceeds. A widowed client asks about inheritance tax. You know the tax mechanics cold. What you cannot do — without FCA authorisation — is recommend a product, a fund or a transfer.

So most accountants do one of two things. They mumble something about speaking to an adviser, or they change the subject. Both waste the moment. The client still needs help, and they trust you more than anyone they will find on a search engine. A structured referral is the third option: you stay inside your permissions, the client gets regulated advice, and the work you did to earn that trust is finally recognised in your fee income rather than someone else's.

The mechanics are simpler than most practices assume. First, the client consents to an introduction — a sentence in a meeting, confirmed by email. Second, the adviser runs a fact-find and issues a suitability report; that is their regulatory burden, not yours. Third, if the client proceeds, the adviser earns an initial fee, and a pre-agreed share flows back to you as the introducer.

Typical arrangements share 20% to 25% of the initial advice fee, and some include a slice of the ongoing charge for as long as the client stays advised. The timeline from introduction to first commission statement is usually six to ten weeks — longer for pension transfers, shorter for protection. The statement itself matters: it should name the client, the case, the fee earned and the share paid. If you cannot reconcile it to a specific introduction, the arrangement is too loose.

ICAEW and ACCA members are bound by ethical codes that require you to tell the client, in writing, that you may receive a payment for the introduction — and in some cases to account for it. This is not optional garnish. Fail to disclose and a routine practice assurance visit becomes an uncomfortable one.

Good practice looks like this: a short disclosure letter at the point of referral, stating that a fee may be paid, roughly how it is calculated, and that the client is free to find their own adviser instead. Keep a copy on the client file. Referral networks such as SmartPeer track each introduction and generate the disclosure letter automatically, which removes the most commonly missed step. Boring paperwork first. The income follows. Done this way, referral fees survive any inspection your institute cares to run.

Most practices refer reactively — only when a client pushes. The firms that build real referral income flip that. They add one question to the year-end agenda: is there anything outside tax we should flag for advice? They keep a shortlist of two or three vetted advisers rather than one overloaded contact. And they review referral income quarterly, exactly as they would review recoverability.

The numbers are modest per case but compound quickly. A practice with 300 business clients that surfaces one genuine advice need per week — hardly ambitious — could see thirty to forty completed referrals a year. At a few hundred pounds each, plus trail, that is a fee line that costs no chargeable hours to service. None. It also deepens the client relationship, because the accountant who spotted the problem is remembered long after the adviser who solved it.