Commissions, Kickbacks and Finder’s Fees in the Wedding Industry: Why WPIC Says No

by Danielle Andrews, President and Co-Founder of The Wedding Planners Institute of Canada Inc.

Please note: We are not lawyers, and this article is not intended to provide legal advice. Laws vary between countries and jurisdictions. If you have questions about the legality of a particular business practice or compensation arrangement, please speak with a qualified lawyer in the jurisdiction where you conduct business.

WPIC has been talking about commissions, kickbacks and finder’s fees in the wedding industry for well over two decades. In fact, some of our earliest articles on this subject were written because we were hearing from wedding vendors who felt pressured to pay planners for referrals or risk losing access to their clients. Unfortunately, despite all of the conversations our industry has had about professionalism, transparency and ethical business practices since then, this practice has not disappeared.

In some wedding markets, particularly certain international destination wedding markets, commissions are so commonplace that they are simply accepted as part of doing business. We hear this frequently about a very popular wedding spot in Europe, for example. A planner recommends a venue, photographer, florist, caterer or other wedding professional and receives a percentage of the booking in return. In other cases, vendors are expected to pay a referral or finder’s fee in order to receive the planner’s clients in the first place.

WPIC continues to be strongly opposed to this practice when a wedding planner is already being paid by the client to provide professional planning services and the financial relationship with the vendor is not part of a clear, transparent business model understood by everyone involved. Our objection is not about wedding planners earning money. We want wedding planners to operate profitable businesses and charge appropriately for their knowledge, time and expertise. The issue is that when a couple hires a wedding planner, they reasonably expect that planner to represent their interests. Once a planner has a financial incentive to recommend one vendor over another, that relationship becomes much more complicated.

Who Is the Wedding Planner Working For?

A couple hires a professional wedding planner for their expertise, guidance, vendor knowledge, logistical experience, coordination and wedding management. Depending on the level of service, the planner may also be helping to establish the budget, source vendors, review proposals, attend meetings, manage communication, create timelines and guide the couple through hundreds of decisions.

Vendor recommendations are part of that professional service. When a planner tells a couple, “I think this photographer would be perfect for you,” the couple has every reason to believe that recommendation is based on the photographer’s work, reputation, pricing, professionalism and suitability for their wedding. They are not expecting there to be an undisclosed financial incentive attached to that recommendation.

This is where the problem begins. If one photographer pays the planner a 15% commission and another equally qualified photographer does not, the planner now has a financial interest in which company the client chooses. Even if the planner believes they can remain completely impartial, the conflict exists. The planner stands to make money from one decision and nothing from the other.

WPIC believes our clients deserve recommendations based on what is best for their wedding, not what is most profitable for their planner.

There Is a Legal Reason to Take Secret Commissions Seriously

Our older articles on this subject were very definitive in describing kickbacks as illegal. With the benefit of updated information, we want to be more precise. Not every commission, referral fee or commercial arrangement is automatically illegal. The structure of the business relationship, the jurisdiction, the contracts involved, the role of the planner and whether the financial relationship has been disclosed can all matter.

What is particularly important for Canadian wedding professionals is that Canada’s Criminal Code actually contains a provision titled “Secret Commissions.” Section 426 addresses circumstances in which an agent corruptly accepts, obtains, agrees to accept or attempts to obtain a reward, advantage or benefit in connection with the affairs or business of the agent’s principal, including showing favour or disfavour toward another person.

Whether a wedding planner would legally be considered an “agent” in a particular situation and whether a specific commission arrangement would meet the requirements of that section are questions for a lawyer. We are not suggesting that every wedding planner who has ever accepted a referral fee has committed a criminal offence. We are saying that Canadian law takes secret commissions seriously enough that wedding professionals should not casually assume that an undisclosed payment for steering business toward a particular vendor is harmless.

Consumer protection laws provide another reason for transparency. The Competition Bureau of Canada has specifically identified commissions, monetary payments, discounts, free products, free services and other benefits as examples of “material connections” that can influence how consumers assess a recommendation. The underlying principle is easy to understand: consumers should know when the person recommending a business has a financial relationship with that business.

Similar principles exist elsewhere. The United States Federal Trade Commission requires disclosure of material connections that could affect the credibility consumers give to an endorsement or recommendation. Within the European Union, consumer protection rules prohibit misleading commercial practices and misleading omissions of material information that consumers need in order to make informed decisions.

That becomes particularly relevant for destination wedding professionals working across several countries. Saying that commissions are “standard practice” in a particular destination does not automatically answer the legal or ethical questions surrounding them.

“But This Is How Business Is Done in …”

We hear this often enough that it deserves to be addressed. Commissions are common within parts of international wedding markets. We understand that destination wedding planners may encounter venues, suppliers and local professionals who consider referral commissions a normal part of their business model.

Common practice, however, does not remove a planner’s responsibility to their client.

European countries are also subject to the European Union’s consumer protection framework, including rules concerning misleading commercial practices and the omission of material information. We would never suggest that every commission arrangement in a certain country is illegal because that determination depends on the circumstances and should be made by a local legal professional. Our concern is much more practical: if your client believes you are independently recommending the best vendors for their wedding, would knowing that those vendors pay you change how the client views your recommendation?

If the answer could be yes, that financial relationship matters.

Someone Has to Pay That Commission

There is also a very practical problem with commissions that is often ignored. The money has to come from somewhere.

Imagine that a photographer normally charges $8,000 for a wedding. A planner expects a 15% commission for referring the client, which represents $1,200. The photographer can absorb that $1,200 and earn less money for providing exactly the same service, or they can adjust their pricing to accommodate the commission.

Neither option is particularly fair. The vendor should not have to give away part of their earned revenue simply for the privilege of receiving a referral, and the couple should not be charged more than another client for the same service so that their wedding planner can receive an additional payment.

This is particularly troubling when the couple is already paying the planner a substantial professional fee. The planner has been hired to provide expertise, research vendors, make recommendations and manage the wedding. Why should the vendor also have to compensate the planner for recommending them?

If the planner’s professional fee does not adequately compensate them for the amount of work involved in sourcing and managing vendors, the answer is to revisit the planner’s pricing, not quietly supplement that income through vendor commissions.

It Is Not Fair to the Other Wedding Professionals Either

We also need to look at this from the vendor’s perspective. Wedding professionals have significant expenses associated with operating their businesses. Photographers invest in equipment, editing software, insurance, staff and countless hours of post-production. Florists have product costs, staffing, vehicles, refrigeration, studio expenses and extensive labour. Caterers have food, staffing, equipment, transportation, licensing and insurance expenses. DJs, musicians, decorators, rental companies and every other wedding professional have their own overhead and costs of doing business.

Why should they have to surrender a percentage of their income to a planner simply to have access to that planner’s clients?

We have heard from vendors who have been told, directly or indirectly, that if they do not pay a commission, they will not be recommended. At that point, the issue goes far beyond a thank-you for a referral. The recommendation is effectively for sale.

This also creates an unfair marketplace. An outstanding vendor who refuses to pay commissions may lose opportunities to a less suitable competitor who is willing to pay. The couple may never know that another professional would have been a better fit because that professional was excluded from consideration for financial reasons.

That is not how a preferred vendor relationship should work.

Preferred Should Actually Mean Preferred

WPIC has always encouraged wedding planners to develop strong professional relationships. Having a trusted network is one of the tremendous benefits an experienced planner brings to their clients. Over time, we learn who communicates well, who delivers what they promise, who remains calm when something goes wrong and who consistently takes excellent care of our clients.

Those relationships should be earned.

If a planner or venue presents a list as “Preferred Vendors,” “Recommended Vendors” or “Trusted Wedding Professionals,” clients will naturally assume the businesses were selected because of their quality and the experience the planner or venue has had working with them. If those companies actually purchased their placement, that is something very different.

There is nothing inherently wrong with advertising. If businesses are paying for placement, call it a sponsored directory, advertising partnership or paid listing and make the commercial relationship clear. What we object to is selling access to a recommendation list while presenting that list to couples as though the businesses were selected solely on merit.

Disclosure Helps, But It Does Not Eliminate the Conflict

A common response to the ethical concern is, “I disclose the commission in my contract.”

Transparency is certainly better than secrecy, and disclosure may be legally important depending on the jurisdiction and arrangement. From WPIC’s perspective, however, disclosure does not necessarily eliminate the underlying conflict when the planner is being paid by the couple to provide independent professional advice.

If a couple is paying a planner $8,000 for planning services and the planner also receives 15% from certain vendors the couple books, it is reasonable for the couple to wonder whether those payments influence the recommendations they receive. That question exists even if a paragraph in the contract says commissions may be collected.

There are business models in which commissions are a normal and understood part of the transaction. Travel advisors, for example, commonly operate within supplier commission structures. An event production company may contract directly with suppliers, package those services and sell the complete production to its client at a markup. Affiliate relationships can also be legitimate when the commercial relationship is clearly disclosed.

Those models are different from a wedding planner being retained by a couple to represent their interests while quietly receiving additional compensation from the vendors being recommended to them.

What Should You Do When a Vendor Offers You a Referral Fee?

Our advice has remained the same for years: whenever possible, turn that benefit into a benefit for your client.

If you recommend a photographer because you genuinely believe they are the right photographer for your couple and that photographer offers you $500 as a thank-you for the referral, ask whether they would be willing to give your client a $500 preferred-client discount instead. Perhaps they can provide an album upgrade, an extra hour of coverage or another meaningful benefit.

Now your professional relationship has created additional value for the couple. You can tell your client that because of your established relationship with that photographer, they are receiving something they would not necessarily have received by contacting the company on their own.

That strengthens the value of hiring a professional planner without compromising the integrity of the recommendation.

What About Gifts?

Professional relationships naturally lead to gifts and gestures of appreciation, and common sense should apply. A florist sending a planner flowers after a wonderful season together is not the same thing as a florist agreeing to pay 10% of every wedding the planner sends their way. A photographer taking a planner to lunch is not the same thing as paying $1,000 every time a client books.

The important questions are whether the benefit is tied to a specific recommendation, whether it creates an incentive to direct business toward that company and whether it could reasonably affect, or appear to affect, the planner’s professional judgment.

Wedding professionals should be able to maintain warm, generous and mutually supportive industry relationships without turning client referrals into financial transactions.

Your Client Is Paying for Your Professional Opinion

This is ultimately what the issue comes down to for WPIC.

When clients hire a wedding planner, they are paying for more than a timeline and a person standing at the back of the ceremony with a clipboard. They are paying for years of experience, knowledge, relationships, judgment, problem-solving skills and professional guidance. Part of the value of hiring a planner is having someone who understands the industry and can help them determine which professionals are best suited to their wedding.

That professional opinion has value, and the planner should charge accordingly for providing it.

If you believe your planning fee is too low for the amount of vendor research, consultation and management you provide, raise your fees. If your service includes extensive sourcing, build that into your pricing. If a particular project requires substantially more vendor procurement than usual, charge appropriately for the additional work.

There is no need to rely on hidden commissions to make a wedding planning business profitable.

WPIC’s Position Has Not Changed

WPIC believes wedding planners should operate successful, profitable businesses and be properly compensated for their expertise. We also believe that when a planner is hired by a couple to provide professional advice, the couple should be able to trust that advice.

• We do not support wedding planners demanding payment from vendors in exchange for access to their clients.
• We do not support vendors having to surrender part of their earned fees simply to remain on a planner’s recommendation list.
• We do not support increasing a couple’s price to cover a commission they do not know exists.
• We do not support excluding excellent wedding professionals from consideration because they refuse to pay for referrals.
• Most importantly, we do not believe a planner’s professional recommendation should be something a vendor can purchase.

Before accepting a commission, referral payment or finder’s fee, consider whether you would be comfortable explaining the complete arrangement to your client before they choose the vendor. Would you tell them exactly how much you receive if they book that company? Would you tell them whether another vendor pays you more or less? Would you be comfortable confirming that their price has not been increased to accommodate your commission? Would you recommend exactly the same company if they stopped paying you tomorrow?

Those are worthwhile questions for every wedding professional to consider.

Final Thought

For years, wedding planners have worked hard to elevate wedding planning from something people viewed as a hobby or side job into a respected profession. With that recognition comes responsibility. Professionalism is not only reflected in the weddings we produce. It is reflected in our contracts, our pricing, our relationships, our transparency and the way we conduct ourselves when our clients are not in the room.

Build strong relationships with venues and vendors. Refer professionals whose work you respect. Support the people who consistently take wonderful care of your clients, and appreciate the professionals who refer business back to you because they know you will do an excellent job. Those relationships are invaluable and are one of the things that make the wedding industry such a collaborative community.

Your clients hired you for your expertise and judgment. Charge appropriately for that expertise, and then give them recommendations based on what is genuinely right for their wedding.

A professional recommendation should be earned through great work, not purchased with a percentage of the booking.

Sources for further reading: Criminal Code of Canada, s. 426, Secret Commissions; Competition Bureau Canada guidance concerning material connections and deceptive marketing practices; Competition Act of Canada; U.S. Federal Trade Commission Endorsement Guides; European Union Unfair Commercial Practices Directive (2005/29/EC).