AdvicePay Financial Advisor Community Blog

Is Your Billing & Payment Software Compliant?

September 22, 2021 By Isabelle McGrail
Isabelle McGrail

In the financial services industry, no one is a stranger to the word compliance.

While researching how to stay compliant as a financial advisor, you’ll usually find long-winded, overwhelmingly complex descriptions of what is required to be in compliance and the various things one could do to trigger custody of client funds. (And if you’re like most people, the word “compliance” in and of itself typically conjures up emotions of anxiety and dread!)

At AdvicePay, we appreciate that researching compliance and what you can do to avoid triggering custody can be painful. That is exactly why our platform was built by financial advisors, for financial advisors. In using AdvicePay, compliance goes from being a scary beast to something simple you can manage with ease. This allows you to focus on providing advice to clients and get paid more easily. Let AdvicePay remove the burden of compliance from your plate!

Now, you might be asking yourself: why is compliance such a big deal, and why should it matter to me or my firm? 

Let’s start with the custody piece. Having custody of client funds is defined as having too much control over client funds via the ability to withdraw or transfer funds without proper client approval. While having custody over client funds is not illegal, it comes with significant compliance requirements -- including having to arrange for annual “surprise” audits. 

In addition to being time-consuming and stressful, audits are also incredibly costly, ranging anywhere from $10,000 or more. This is time that you could spend working with new clients, money you could use to better improve your business, or even go on vacation! Furthermore, custody regulations should be adhered to as they are designed to protect consumers -- aka your clients.

One of the major ways to trigger the custody rule is via the method you use to get paid for your services. In today’s world, there are oodles of payment processing platforms available across the internet. The issue? Many of them ban billing for anything related to the financial services industry and can put you at risk of major compliance violations. 

For example, did you know that the Acceptable Use Policy for Quickbooks restricts against use by financial services businesses? In asking XY Planning Network compliance expert Travis Johnson about the risk of using some of these other platforms, he relayed the following regarding the Quickbooks system: 

“[We] were informed that financial services institutions, including the sale of financial and investment-related services, fell into the same category as those selling financial products. While some advisors have mentioned that they were able to get an exception, there is currently a very real risk that they could get removed from those platforms with minimal or no notice.”

Learn more from an AdvicePay user who was kicked off Quickbooks without warning. 

In addition to the risks of getting removed from the platform and losing all client funds and invoicing records, Quickbooks allows an advisor to take certain actions that cause additional compliance risks such as increasing the amount on a recurring subscription without obtaining proper client approval. 

Since AdvicePay was created by financial advisors, our platform was designed with financial industry-specific compliance measures in mind:

  • Advisors cannot view any client bank account or credit card information 
  • Advisors cannot bill clients without client permission
  • Advisors cannot withdraw client funds without client approval
  • Advisors cannot make any billing changes without client approval 

In addition to the above features, AdvicePay is committed to responding to regulatory requests to make sure we are adapting to new changes and regulations. When using a platform that isn’t built specifically with financial industry compliance in mind, this is not something you can expect. 

As the fee-for-service business model increases in popularity, we anticipate that regulations around the model could grow stricter. This may mean that more state regulators ask you to provide proof of communications to clients surrounding their subscriptions, evidence of invoice receipts with proper invoice date ranges, and even planning deliverables.

Ready to try AdvicePay?



Posted by Isabelle McGrail

As a Lead Business Development Associate, Isabelle is excited to help prospective users learn about how they can get the most out of the AdvicePay platform. Prior to joining our team, Isabelle worked for a video licensing company, giving her a unique perspective on sales and customer service. When she’s not helping prospective users see all the glory of AdvicePay, you can find Isabelle camping, spoiling her dog, and eating sushi while dreaming of her one-day vacation to Thailand.

Topics: Compliance