Advisor Business Plan

Compliance and Retainers

One of the greatest areas of concern when it comes to implementing retainer models is the issue of compliance. Part of this has to do with growing pains related to regulation in the industry. The structure of the industry and the way in which is monitors its service providers is not always up-to-date with industry trends. While this is a cause for anxiety about the retainer model, it is by no means a reason to steer away from it. There are ways to stay completely compliant with local legislation and still structure your business model in a way that includes recurring fees.

The details of retaining your compliance differ depending on your location. Certain states create greater obstacles to compliance than others, but even these hurdles can be overcome. It is important to keep in mind that the purpose of regulation is to ensure that financial services are provided in a transparent and fair way, and that the client’s best interests are at the heart. They exist to make financial service providers accountable and reasonable. If you can prove that the services you are providing abide by these core tenets, you will find a way to abide by compliance regulations in any area.

Historically, regulators have been nervous of retainer models, as there is potential for abuse. Financial advisors could hypothetically take remittance and not provide a service in return. Perhaps more unnerving for clients is that advisors could have custody over their funds, opening them up for abuse and theft. Remaining compliant is therefore an issue of proving that you are operating in an honest way. If you can prove that you are offering your skills and time in a concrete way in exchange for the payment of an agreed amount by your client, you will be well on your way to ensuring that you retain compliance.

Read more about investment advisor compliance when charging retainer fees.