When FINRA raises its gift limit from $100 to $300 on March 30, 2026, many wealth management firms may view it as a long-overdue adjustment. However, the real challenge lies not in the new dollar threshold but in the operational gap between front-end approvals and back-end expenditure tracking, according to Steve Brown, head of business development at StarCompliance, a regulatory technology firm serving over 500 financial services clients globally for 27 years.
Brown emphasized that compliance teams must ensure that what was approved on the front end matches what was actually spent. “Are firms using a manual workflow where they’re still receiving requests for gifts or entertainment via email? If so, how are they going to meet the books and records obligations that regulators are going to expect?” he said in a recent interview. Under FINRA Rule 3220 and SEC Rule 206(4)-5, firms must demonstrate that approvals were honored in practice, not just in theory.
The distinction between gifts and entertainment remains a critical area of confusion. Gifts are capped at $300 per person annually, while entertainment is not limited if it is reasonable and not excessive. For example, if an advisor accompanies a client to a World Cup match, the expense counts as entertainment. But if the advisor hands over tickets without attending, those tickets become a gift—and with FIFA World Cup tickets ranging from roughly $400 to $2,500 per match, such gratuities could easily breach the $300 ceiling. Brown noted that high-dollar entertainment events are not automatically off-limits, but they require formal policies and tracking to avoid regulatory scrutiny.
Brown advised firms to create structured, category-based policies with defined thresholds, approval levels, and frequency limits. He suggested separate buckets for de minimis items (like branded hats or mugs), deal-related gifts, holiday and life-event gifts, standard gifts subject to the $300 cap, and entertainment such as client dinners and ticketed events. For instance, a firm might allow client dinners up to four times per year at no more than $1,000 per event, with senior management sign-off required for exceptions. “That’s a policy,” Brown said. “Now compliance knows what to monitor.”
StarCompliance addresses the back-end problem by integrating with expense management platforms to cross-reference employee requests against actual charges. “We tick and tie the front-end employee request for the gift or entertainment to the actual expense, ensuring the two are in sync with what was approved,” Brown explained. This automated approach helps firms meet books and records obligations and avoid regulatory exposure.
The concept of pay-to-play also applies in wealth management, Brown warned. If a client demands tickets to a high-profile event like a World Cup match in exchange for business, that raises red flags. Charitable contributions can also slip into problematic territory if not properly supervised. “It’s got to be supervised. It’s got to be reasonable and rational,” he said. Brown also noted that some retail brokers and advisors skip the approval process and address compliance retroactively, a practice that increases risk.
For firms looking to strengthen their compliance workflows, Brown recommended leveraging technology to automate tracking and approval processes. He pointed to the Advisor CRM Launches Ember AI Tool to Streamline Client Onboarding and Workflows as an example of how automation can reduce manual errors. Additionally, recent enforcement actions, such as FINRA Fines WestPark Capital $520,000 for Reg BI Violations in GWG L Bond Sales, underscore the importance of robust compliance systems.
Ultimately, Brown stressed that firms with clear, black-and-white policies—including opportunities for exceptions—will succeed. “Those that don’t and are just loosey-goosey about it are setting compliance teams and frankly the business up for headaches and regulatory exposure,” he said. As the March 2026 deadline approaches, the focus should shift from the dollar limit to the systems that ensure compliance.
