The founders of the XY Planning Network broadened their reach into the advisor technology space with the introduction of a new automated payment processing product — but still insist there’s no master plan to build out an advisor tech suite.
AdvicePay allows advisors to bill and collect fees directly from a client’s credit card or bank account via Automated Clearing House transfers, the company says. Traditionally, these advisors filed paper checks to clients on a recurring basis.
Clients enter their credit card or banking information directly into the system and manage their information through a client portal. AdvicePay raised
One of the biggest payment hurdles to fee-only advisors has been the hassle of asking clients to write out paper checks, says AdvicePay and XYPN co-founder Michael Kitces, who is also a columnist for Financial Planning. The cumbersome process made it difficult for firms to compete with the AUM model, he says.
“As financial planning looks to expand its reach beyond its traditional affluent clientele that pay for services via assets under management, and towards a fee-for-service model to reach new markets, advisors need a payment processor that can facilitate getting paid financial planning fees in a compliant manner,” Kitces says.
The payment product also avoids triggering custody audit requirements for advisors, who have no access to clients’ private payment information, the firm says. All payments and changes in billing need to be pre-approved by clients. The system is also encrypted for advisors wary of a potential breach.
“Fee-for-service financial planners across the country face unique regulatory challenges due to rules that can vary from state to state,” says Alan Moore, XYPN and AdvicePay co-founder, adding that the system’s back-end handles the regulatory complexities and ensures compliance.
The automated payment platform is the latest technology update available to XYPN members. In August, Moore and Kitces introduced XY Investment Solutions, an investing platform and landed the seed funding a few months later to help launch AdvicePay.
The service costs $50 per user per month, according to the firm’s website, with additional fees for transfers attached.
While the new technology offers XYPN advisors faster and easier payment processing, AdvicePay is a separate company from XYPN and Moore says there are no plans to build a larger offering.
“While AdvicePay did start out as another niche solution for XYPN advisors as well,” Moore says, “the interest we received from the broader financial advisor community is what led us to raise capital, and offer it entirely separately as a standalone service. These are entirely separate solutions.”
