AdvicePay Financial Advisor Community Blog

Compliant Billing Solutions for Financial Advisors

August 28, 2018 By Alan Moore, MS, CFP®
Alan Moore, MS, CFP®

AdvicePay compliant billing platform financial advisorsHere’s a fun paradox for the financial advisor — while you spend your entire day planning other people’s finances, your own billing systems are some of the most challenging parts of your job. Like the therapist who is the most challenging client for other therapists, you need to seek solutions from those who may understand the intricacies of your profession. Central to the issue of why billing for financial advisors is so challenging is the task of finding compliant payment processing solutions. The retainer model is gaining popularity with financial advisors as a means of serving a new set of clientele that is not asset-laden. One of the key obstacles to this model is sourcing a payment processor that regulators are happy with.

No matter where you live, you will come up against the issue of retaining compliance as a financial services professional. Credit card companies, banks and many payment processors do not want to even engage with financial services, as doing so throws up a set of legal challenges they don’t want to deal with. So where is it that financial advisors are supposed to turn? Before we answer that question, let’s have a look at the specific challenges to compliance, and why most payment processing solutions are incompatible with the business of financial advising.

The Custody Battle

Why is it that billing for financial services, as opposed to taking commission for them, is such a dangerous notion for regulators? First, in many states, regulating bodies are simply more used to the old way of doing things. In the AUM model, financial service providers are compensated on a commission basis. As this model becomes more obsolete and the financial advisor retainer model rolls in, regulators fear the potential for customer abuse. Nowhere is this fear more prevalent than when it comes to financial advisors having custody over their clients’ funds. If a RIA is known to regulators for having custody, they are subject to surprise audits by an independent body. Most financial advisors would agree that staying clear of the custody issue is the best course of action.

Client Access and Transparency of Services

The issue of custody has certain offshoots that can also cause red flags for regulators:

    • Client Access — For you to retain compliance in the retainer model, it is imperative that your customers have complete agency when it comes to managing payments.
  • Transparency of Services — At every turn, the customer needs to know what they are being charged and the exact services they are receiving in return.

A Compliant Payment Processing Solution

The challenges to compliance in the retainer model should not stop you from trying what could become the cornerstone of your business as a financial advisor. As a result of an in-depth exploration of this particular pain point of the financial services industry, there is now a compliant payment processing solution that was built specifically for financial advisors — AdvicePay. Founded on the basis of transparency and client access, AdvicePay is setup to avoid triggering custody. The client remains in control of their finances at all times, meaning you stay compliant, the regulators stay happy and your customers retain their agency. Everybody wins.


Posted by Alan Moore, MS, CFP®

When life hands you limes, make margaritas. Alan’s entrepreneur journey began in 2012 after he was fired from his job as a financial planner and decided to start his own business. With his undergrad and M.S. in Family Financial Planning, Alan quickly put his business-building smarts and experience to work in helping other advisors start, run, and grow their own financial planning firms to serve NexGen clients. In 2016, he launched AdvicePay with partner Michael Kitces to operationalize the fee-for-service business model with technology that makes sense for the specific needs of financial planners. When he’s not starting companies, Alan lives openly as a self-proclaimed CrossFit junkie and dedicated snowboarder, a skill he is already passing along to his four-year-old son.

Topics: Compliance, Retainer Model