Breaking Down the Regulatory Requirements for Subscription Services

Make It Clear You're Not Charging Twice

This is one of the first red flags compliance regulators will look for. If you’ve been offering financial planning as part of your AUM fee, and now you're charging a flat monthly or annual fee for “planning,” they’ll want to know: What changed?

The key is to expand and clearly define what you're offering. A good subscription plan shouldn’t just repackage what’s already covered by AUM. It should go beyond investment advice.

• These value-added services might include:
• Tax planning and coordination with CPAs;
• Real estate or auto purchase financing;
• Advice on employee benefits;
• Planning around stock options or long-term incentive compensation;
• College funding strategies; and
• Multi-generational wealth planning.

You don’t have to do all this in-house, either. You can act as the quarterback, connecting clients to vetted professionals who can provide these services.

If you're wondering which services add the most value in a subscription model, start with tax planning. Tax is where your advice shows up most tangibly in the client’s financial life. In many practices (ours included), it’s the cornerstone of the value being delivered. That doesn’t mean you’re filing returns, but it does mean you’re helping the client think ahead about how their decisions affect what they owe, what they keep, and what they can pass on.

This is one area where independent advisors often have an edge over large firms or wirehouses. In those environments, compliance departments may place tight limits on what advisors can say about tax issues.

A good subscription model puts the advisor in the flow of every key decision— investments, benefits, large purchases, and yes, taxes. And when that tax guidance is integrated with the rest of the plan, the client ends up with a much clearer picture of where they’re headed.

Define What Happens in an Exit

Let’s say a client pays you $4,800 for the year but decides to cancel after four months. What happens next?

From a regulatory standpoint, there’s no one “right” answer. But what’s absolutely required is that you’re clear about it upfront. Your agreement should spell out:

• How cancellation works;
• Whether clients get a refund; and
• How you calculate the refund (time-based, work delivered, etc.)

Regulators are on high alert about subscriptions because of how other industries, like telecommunications companies and gyms, have used them to lock people in. In the advisory space, the goal is transparency. If a client leaves, they should know exactly what to expect.

And consistency matters. If you're handling cancellations on a case-by-case basis or making judgment calls, that’s going to raise compliance flags quickly.

Adapt Your Agreements for State Regulations

You might be SEC-registered, but that doesn’t mean you’re in the clear with the states where your clients live.

Most states (37 of them) follow federal SEC guidelines pretty closely. But the other 13? They have their own rules, and they don’t always make them easy to find.

Some states want specific language in your subscription agreements. Others don’t like certain terms like “retainer,” while some might even have concerns with the word “subscription” itself, depending on the context.

This might feel like nitpicking, but regulators take language seriously. Calling your service a “retainer” can accidentally imply that you’re tracking hours or billing by the minute, even if you’re not.

That creates a new set of obligations and disclosures. It also adds confusion about how you’re pricing your services. Your clients may not care what you call it, but regulators absolutely will. Stick with clear language that describes what you’re doing.

Another wrinkle you’ll run into with subscription agreements is the patchwork of rules around prohibited activities. Nearly every state has its own definition of what advisors absolutely can’t do, and while some of it is common sense, other parts can be surprisingly nuanced.

This creates a challenge when you’re trying to standardize documents across your firm. A one-size-fits-all agreement that works in ten states might need revisions in three others. If you try to build one master agreement that covers everything for every state, you could end up with a document that’s dozens, or even hundreds, of pages long.

The bottom line is you may need to tailor your agreements depending on where your clients are located. That’s not a reason to avoid subscriptions, just a reminder that “one-size-fits-all” rarely works in compliance.

When thoughtfully implemented, a subscription-based model can be a valuable addition to any advisory practice. It expands access to clients who may not meet traditional AUM thresholds, fosters deeper client engagement by broadening the scope of advice, and provides a stable, recurring revenue stream that supports long-term business sustainability.

While compliance requirements around subscription services may be more nuanced, they are entirely manageable with proper structure and planning. By approaching the model with clarity, transparency, and an understanding of regulatory expectations, advisors can unlock significant value for both their clients and their firm.

Daniel J. Friedman is a founding partner and CEO of WMGNA, LLC Tax-Out Financial Solutions™, a firm that employs a tax-out approach to financial planning. He is a frequently sought-after guest on the local major TV outlets and has been featured in several prominent industry magazines as well. Mr. Friedman serves on the Advisory Board for The Miracle League of Connecticut. He also served on the Connecticut State Insurance and Risk Management Board from 2013-2019.

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