AdvicePay, the payment processing platform launched by XY Planning Network founders Alan Moore and Michael Kitces, announced Wednesday that it is launching Deliverables, a tool designed to centralize the financial planning payments and compliance review process for large hybrid registered investment advisers.
Deliverables is a centralized platform that will systematically track, report and manage the financial planning deliverables that a firm's advisers produce, Kitces said. Advisory firms can use the tool to ensure that financial plans were delivered when clients are engaged in subscription or retainer financial planning fee models.
The issue for larger firms has been adopting new fee models at scale, Kitces said. Typically, firms resort to using complex, error-prone spreadsheets with manual updates, but now that firms are using these new planning models for the first time, there needs to be assurance that planning services are actually being provided since no tangible product is involved.
“There was just literally no system to manage that process before,” he said. “All the systems were built for scalable product sales, they weren't actually built for scalable advice. As the industry is really shifting from products to advice, these are the gaps that are coming up.”
Deliverables is already available and is about to be deployed with launch partner Cetera Financial Group and its network of 8,000 advisers. LPL Financial’s network of 17,000 financial advisers is on deck to adopt the new tool, Kitces said. LPL Financial already uses AdvicePay for its fee-for-service billing.
Deliverables was also built with regulatory concerns over advisory fees in mind, Kitces said, so that enterprise firms can avoid regulatory fines and negative headlines related to “fee-for-no-service” claims.
AdvicePay enables advisers to set their own prices for services like financial planning and accept payments via credit card, debit card or Automated Clearing House transfers without requiring a brokerage account. Advisers can collect one-time payments and ongoing, subscription-style fees.
The platform has the majority of the market share for customized billing and payment tools at 7.65% — a notable leap from 2.84% last year, according to the 2021 T3 Advisor Software Survey.
Kitces said he believes the biggest driver for AdvicePay’s growth will be the generational shift in wealth over the coming years. With $68 trillion possibly being transferred to the next generation, a lot of firms are trying to get ahead of that by working with Gen X and millennial clients before they inherit.
“We built this whole industry around serving baby boomers,” Kitces said. “Before the only business model to work with young people [was] to wait to get their pile of money or sell them something, which doesn’t work.”
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