Though financial advisors have existed in various forms over the centuries—as accountants, lawyers, bankers, and others—the financial planning field has, since its genesis, been a standardized and compliance-oriented space. Born of a December 1969 meeting to create the International Association for Financial Planners and the College for Financial Planning, this subfield of the financial-advisor profession has solved for uniformity from the outset. 

That kind of ethos also shapes the fintech tools that power financial planners and other advisors. Financial advisors have to stay apprised of dynamic regulatory requirements, while also ensuring quality services rendered to clients of all sizes. 

Qualifications

A precondition for fintechs building out financial advisor-focused products is to delineate who qualifies for their tools. The US Financial Industry Regulatory Authority (FINRA) clearly defines who is or is not a financial advisor. They must carry a Series 7, Series 66, or Series 65 qualification, or are brokers, investment advisers, private bankers, accountants, lawyers, insurance agents, or financial planners. 

However, within that specificity is a great range of specializations and professions. The tools used by lawyers vary significantly from those that power the work of private bankers or brokers. That doubled-edged reality may convince some fintechs to build out tools that are used across these domains (e.g. billing), or it may push them to develop and market solutions for specific subfields of the financial-advisor space. 

Asset classes

Financial advisors have to stay up to date on how burgeoning asset classes are treated by regulators. Crypto in particular has been a headache for financial advisors, as relevant government entities have yet to define what crypto is, especially in terms of how it should be taxed.

“They don't really have any good regulations out there yet,” says Emery Sheer, a Florida-based accountant who also runs a YouTube channel on crypto taxation. Sheer said many of the guidelines issued by the IRS don’t mention crypto, and cover other assets that are defined as property. “We have to kind of guess,” he said.

Financial-advisor fintechs can be particularly useful by offering experts to the financial advisors making up their client base, helping them access legible and comprehensive information to ensure compliance with government expectations. 

Interest rates

Maybe the most significant regulatory determinant shaping how fintechs build and operate tools for financial advisors is how the Fed decides to address inflation in the coming months. If demand for mortgages remains far below its peak, then advisors will deal with a drastically lower need for housing-related tools. Related stock-market and private-market performance further shapes financial advisors’ needs in the midst of these headwinds. 

Providing real-time updates to workflows, especially when interest rates are so dynamic, is paramount to developing the right financial plan for clients in 2023. Complementing these updates with insights and analysis can help hundreds of thousands of advisors navigate headwinds successfully.