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Opinion & Essays - December, 2001 Issue #88 

By Lon Woodbury, IECA
Certified Educational Planner

We all know “there is no free lunch,” yet there always seems to be a lot of people looking for a way to avoid this basic truth. When faced with the somewhat daunting task of determining which of the many residential programs is appropriate for one’s child, “Finders’ Fees” masquerade as free advice. In actuality, parents pay for such advice in hidden costs, limited choices, or by relying upon inadequate experience.

My professional colleagues classify Finders’ Fee as money received from a program in exchange for giving it as a referral. The Independent Educational Consultants Association (IECA) Principles of Good Practice precisely states: “…A consultant does not accept any compensation from educational institutions for placement of a child.” Every IECA member has signed a pledge accepting this Principle of Good Practice statement, in particular, refusing to accept Finders’ Fees. Frequent discussions at IECA Conferences have made it apparent that this important central principle of the organization has evolved from a long history of abuse. Many non- IECA educational consultants have also adopted this same principle.

What is the reason for this hostility to Finders’ Fees among so many educational consultants? Why should parents care whether their referring professional accepts Finders’ Fees? Advocates of Finders’ Fees justify this practice by explaining that parents can get professional advice at no cost when the school or program pays the professional referral services. They claim this helps parents who are already facing large tuition costs.

A number of reasons leap out in response to these questions.

First of all, when a Finders’ Fee is paid, it indicates that the referring professional’s income is probably a higher priority than the child’s needs. It creates an automatic conflict of interest between what is best for the child and what is best for the referring professional’s pocketbook. At the very least, it gives an appearance of impropriety. When accepting Finders’ fees, the referring professionals’ first allegiance is to their employer, the school(s) or program(s) paying their fee. The needs of the parents and children become a secondary, rather than a central focus. If the school or program that is most appropriate for the child does not pay a Finders’ Fee, it is very unlikely that it will be recommended by the referring professional, who is likely to instead recommend less appropriate programs that do pay Finders Fees. In my experience, few parents will knowingly accept second best for their child, but they might be doing exactly that by working with a “no- fee” referral agency.

Secondly, when a program plans to pay Finders’ Fees, the tuition for all students is increased to cover the anticipated payment of Finders’ Fees. This is a transfer of wealth, since all parents will be paying for Finders’ Fees through higher tuitions, even if they don’t use their services. Again, I doubt if many parents are willing to pay higher tuitions to provide an income to referring professionals they’ve never met. If parents do need to pay for a referral, it is far more to their benefit to know what they are paying to find the most appropriate school or program for their child’s needs, rather than to serve a program’s quotas.

A third reason for hostility towards the practice of Finders’ Fees it that it is based on a marketing concept that is most profitable when parents are too trusting and desperate to ask the right questions. Especially in regards to Special Needs referrals, it is in a sense, preying on the desperation and confusion of parents at a time when they are frantic to find someone they can trust.

Yet another reason for the antagonism towards Finders’ Fees comes to mind: it is a practice that is almost always secretive. They are based on quiet agreements or understandings between referring professionals and schools or programs. These agreements are never advertised and rarely even admitted. Educational consultants who are IECA members, and the professionals at Woodbury Reports proudly and publicly proclaim, “We do not accept Finders Fees!” The secrecy surrounding Finders Fees suggests those involved know there is something questionable about this practice. If exposed to public scrutiny, it would not cast a positive reflection on any professional who based his/her income on Finders’ Fees. When I started my practice about 12 years ago, I looked very closely at this concept and concluded something just didn’t feel very clean about the practice, so I rejected it.

There are two truisms that apply here. The first: “in order to understand any business or activity, follow the money!” The second: “those that pay the bill call the tune!” Virtually everybody has heard and understands these sayings. However, it seems many parents don’t apply this knowledge when seeking a program for their at-risk child. Could it be that when parents are in crisis because of their child, they become exceedingly trusting, even naďve, and listen to the first plausible advice they find?

Why is it important for parents to understand the practice of Finders’ Fees? A good reason is because in the last year, there has been a rapid expansion of no-fee referral sources, which are actually a form of Finders Fees. Many of these referral sources have pockets deep enough to obtain and hold top positions on Internet Search Engines, and at least imply that they have a large body of schools to which they refer. However in practice, the overwhelming percentage of their referrals are to a small group of programs with which they have quiet financial arrangements. When parents contact one of these referral sources, the referral is pretty much decided before the contact was ever initiated; the advice is not as unbiased as it appears to be. Parents receive the results of a marketing program, rather than a referral based on their child’s needs, possibly to the detriment of the entire family.

In situations where referring professionals are paid by donations or some non-profit organization, they are possibly free from conflicting interests. Yet in most cases, when obtaining placement advice for an at-risk child, nothing is free! Either the parents pay for the advice with an actual exchange of currency, or they pay the price of having their choices limited to a few pre-selected schools or programs.

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