FINRA Floats Rule Changes on Gifts, Noncash Comp

While the $100 gift limit "is way too low and should be raised," $175 "seems like an arbitrary number," Cipperman says. 

"Upping the gift allowance to $175 and consolidating the rules is a step in the right direction," adds Henschen.

The business entertainment rules, the compliance firm adds, "have always been too subjective, whereas firm-tailored policies and procedures can apply some bright line rules. And, there really was no logical reason why the noncash compensation rules only applied to certain transactions."

The proposal's plan that noncash compensation (reward trips) be based on "all of an advisors' products versus select products will [help] to avoid product bias, which isn't an issue at most broker-dealers but still exists," Henschen says. "Since 2010, REITs and alts have been heavily represented at broker-dealer conferences simply because they are willing to spend the money while mutual fund and variable annuity firms have pulled back on conference expenditures."

A 2014 retrospective review performed by FINRA of its rules found that the gratuities and noncash compensation rules needed updating.

Numerous political thinktanks, Henschen notes, have floated the idea of requiring regulations for all industires to be "temporary," and needing to be reapproved every three to five years or they expire. This idea would "help to drop rules that don't work as well."