How to Avoid Regulatory Risk Around Fee-Based Billing

How to Avoid Regulatory Risk Around Fee-Based Billing

Fee-based planners have special compliance requirements that most generic billing systems can't meet.
Tim Welsh
4 min to read
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We're wrapping up Hubly's ‘Fall In Love With Your Tech Stack’ month with a look at AdvicePay. Want to recap everything we've covered this month? Check out previous spotlights on PreciseFP and Pulse360, as well as our interviews with Shauna Mace of SEI and Redtail's David Mehlhorn.

The problem: Generic billing solutions are raising red flags for auditors

Fee-for-service financial planning firms have special compliance requirements around billing. To avoid the appearance of impropriety and conflicts of interest, fee-based planners must adhere to strict regulatory guidelines, with disclosure, record-keeping and fee transparency requirements, among other things. 

There is no shortage of billing solutions on the market today. Typically, solo advisors and small firms will look at something like Quickbooks or Square to handle payments. But as more of these firms move to a fee-based model, remaining on these systems introduces additional risk, including the potential for ‘surprise’ audits that cost them substantial time, money and stress.

What's at Stake?

Generic billing solutions cannot offer the same level of compliance support or security as a platform designed specifically for advisory firms. Square, among other vendors, recognizes this, and goes as far as to exclude advisory firms under its Acceptable Use policy — effectively absolving the company from any liability if you do face an audit. 

So what are auditors looking for that generic billing systems can’t provide? One of the main issues revolves around recurring fees. Fee-based advisors shouldn’t have the ability to initiate, increase or change a recurring bill without client approval. On its own, a system like Square or Quickbooks can’t provide the verifiable audit trail of client communications required to prove this.

Ultimately, however, this is about more than audits — it’s about trust. Clients turn to fee-based advisors because they trust them with their financial future. Unauthorized billing changes, even if they’re unintentional, can very easily jeopardize that relationship. Investing in a billing solution that adds an extra layer of security and confirmation shows that you’re serious about maintaining a client’s trust.

The Solution: AdvicePay

AdvicePay is a payment processing platform designed specifically for advisors and the compliance challenges they face. Among other features, AdvicePay includes a secure portal where clients enter their own payment details; advisors cannot view bank account or credit card information. Additionally, prior approval is required to bill clients or withdraw funds; that approval is automatically logged in AdvicePay’s audit-ready system.

Finally, AdvicePay offers features such as automated billing and email reminders, which help advisors manage recurring payments and keep track of billing schedules. Invoices are set up and issued by AdvicePay as well, providing complete fee transparency in an easy-to-understand format. This, in turn, reduces the risk of missing payments or late fees.

Ultimately, these and other AdvicePay features go a long way towards maintaining trust and minimizing regulatory risk. Clients enjoy a seamless billing experience, and advisors can manage invoicing more efficiently and transparently, with peace of mind knowing their practice is evolving and aligning with the changing world of compliance.


EzraGroup WealthTech Integration Score: 7.64 satisfaction score: 9.0

Pricing: Starts at $10/month

Alternatives: Proprietary software or generic billing solutions (ie, Square, Quickbooks)

Hubly’s Meghan says: AdvicePay was a great addition to our tech stack to streamline our invoice process for financial plans and ongoing billable clients.
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