Building an investing app that regulators and first-time investors both trust

Start with the regulatory model, not the screens

Every investing app sits on top of a set of permissions. Some firms hold their own investment licence and custody arrangements. Many more partner with a licensed broker, custodian or investment manager and build the customer experience on top, with the partner carrying some or all of the regulated activity. Both are legitimate, and the right one depends on your capital, your timeline and how much of the regulated work you want to own.

Whichever you choose, write down who is responsible for what: identity checks, suitability, custody, order execution, client money, complaints, statements and regulatory reports. That split drives the software. If your partner is responsible for suitability, your app must collect the information their process needs and pass it to them in a form they accept. If you are responsible, you need the rules, the records and the people to stand behind them.

Onboarding and KYC

Onboarding is where an investing app wins or loses most of its customers, and where regulators look first. You need to verify identity, screen against sanctions and politically exposed person lists, understand the source of funds where the risk calls for it, and collect tax residency information. The FATF’s guidance on digital identity takes the view that reliable, independent digital identity systems with appropriate risk mitigation can support customer due diligence at standard or even lower risk, which is why remote onboarding is now normal. The regulated firm remains responsible for choosing a level of assurance that fits its risks.

Design onboarding as a sequence of checks with stored evidence, not a single pass or fail. Keep the provider’s raw response, the result you derived from it, the time of the check and the version of the rules you applied. When a check is inconclusive, route the customer to a manual review queue with a clear status in the app, rather than leaving them looking at a spinner.

Ask only what you need at each step, explain why you are asking, and let people save progress. A first-time investor asked for their tax identification number without context will often stop. The same person told that the law requires it for tax reporting, and shown where it is used, usually continues.

• Identity verification, with document and liveness checks where your risk assessment calls for them.
• Sanctions and politically exposed person screening at onboarding and on an ongoing basis.
• Tax residency self-certification, which feeds tax reporting later.
• A verified bank account in the customer’s own name for funding and withdrawals.
• A record of every consent and declaration, linked to the exact wording shown.

Suitability and appropriateness

If you give personal recommendations or manage portfolios on a customer’s behalf, most regimes require a suitability assessment: you must know enough about the customer’s objectives, financial situation, knowledge and experience to be confident that what you recommend fits them. ESMA’s guidelines on the MiFID II suitability requirements in the European Union and FINRA Rule 2111 in the United States are two well-known examples. ESMA’s guidelines explicitly cover automated advice, so a robo-adviser does not escape the obligation because no human is involved.

Self-directed services usually carry lighter obligations, but not none. Many regimes require an appropriateness check before a customer can trade complex products such as derivatives or leveraged instruments, testing whether they understand the risks. Your product catalogue and your checks need to know about each other, so that a product cannot be offered to a customer whose profile does not allow it.

Treat the questionnaire as a regulated artefact. Version it, store every answer with the version used, check answers for internal consistency (a customer who claims high risk tolerance but cannot afford any loss needs a follow-up), and plan when profiles are refreshed. Avoid questions that lead people towards the answer that unlocks more products.

Managed portfolios or self-directed investing

The biggest product decision is whether customers choose their own investments or hand that job to you. Many apps offer both, but they are different businesses with different obligations, and it helps to build them as distinct journeys that share an account, a ledger and a set of documents.

Whose name are the assets held in?

Customers’ investments can be held in accounts designated to each customer at the custodian, or pooled in an omnibus account in the firm’s or custodian’s name, with the firm’s own books recording who owns what. Pooled accounts are common and make fractional shares and low minimums practical, but they move the burden of proof onto your records. Your internal ledger must say exactly what each customer owns at all times, and it must be reconciled with the custodian’s records every day.

Client asset rules exist to make sure customers get their assets back if the firm fails. The details vary by country: the United Kingdom’s Client Assets Sourcebook (CASS) sets segregation, record-keeping and reconciliation rules, and in the United States SIPC protects customers of a failed member broker up to set limits. Whatever regime applies, design for the day an administrator has to work out who owns what from your data alone.

Be precise with customers about what these protections cover. SIPC, for example, states plainly that it does not protect against a fall in the market value of investments. A first-time investor who reads a protection badge as a guarantee against losses has been misled, even if every word on the badge was true.

Payments and funding

Funding looks simple and is not. Bank transfers are cheap but slow and need matching to the right customer. Card payments are instant to the customer but can be reversed. Direct debits suit regular investing but carry their own mandate rules. Many apps restrict funding to accounts in the customer’s own name, and withdrawals to the same verified account, which limits fraud and money laundering risk and is often expected by the regulated partner.

Separate the money a customer has sent from the money they can invest and the money they can withdraw. A deposit that has not cleared, a sale that has not settled and a withdrawal in flight are all different states, and showing one number for all of them causes support tickets and complaints. Settlement cycles differ by market and instrument, so model them rather than hard-coding a single delay.

Every movement of money needs an idempotency key, a confirmed final state from the payment provider, and a double-entry record in the ledger. The same principles that apply to a lending platform apply here: balances derived from entries, never stored as numbers that code can overwrite.

Statements, confirmations and tax documents

Investing apps produce a steady stream of documents: confirmations of each trade, periodic statements, disclosures of costs and charges, and annual tax documents. Regulators specify much of their content and timing, and customers rely on them when something goes wrong. Generate them from the ledger and the transaction history, not from screens, and keep the exact version each customer received.

Tax reporting reaches beyond the customer. Under the OECD’s Common Reporting Standard, participating jurisdictions collect information on financial accounts held by tax residents of other jurisdictions and exchange it automatically each year, which is why tax residency belongs in onboarding. Domestic tax documents vary by country and by account type, so build a document service that can take new templates and rules without code changes in the core.

Plan for corrections. A price feed error or a late corporate action will eventually produce a wrong statement. The platform should be able to reissue documents, show the customer what changed and keep both versions on record.

Explaining risk and returns honestly

First-time investors judge an app by whether it tells them the truth when markets fall. Show returns in money as well as percentages, show losses as clearly as gains, and show fees in money terms over a year rather than only as a percentage. Regulators’ investor education material repeats the same warning for good reason: past performance does not indicate future results.

Projections deserve particular care. A single line showing what a monthly contribution might grow to is easy to read and easy to misread. Show a range of outcomes, state the assumptions, include the effect of fees and inflation where you can, and avoid presenting the optimistic case as the expected one.

Be clear about which return you are showing. A time-weighted return measures how the investments performed; a money-weighted return reflects when the customer added or withdrew money. Both are legitimate, they can differ a great deal, and customers deserve to know which one they are looking at.

Goals, habits and the line on gamification

Features that help people build a habit are among the most valuable in an investing app: goals with a target amount and date, automatic monthly investments, rounding up card spending, reminders when a regular contribution fails. They encourage the behaviour that tends to serve long-term investors, which is investing regularly and leaving it alone.

The same design techniques can push people the other way. In 2021 the US Securities and Exchange Commission asked for public comment on what it called digital engagement practices, including behavioural prompts and game-like features, because of concerns that they might encourage more frequent trading or more risk. A useful internal test is to ask which behaviour a feature rewards. Celebrating a completed savings goal is different from celebrating a tenth trade in a day.

• Reward consistency and progress towards a goal, not trading activity.
• Make pausing or stopping a regular investment as easy as starting it.
• Keep notifications about the customer’s plan, not about market excitement.
• Review engagement features with compliance before launch, not after a complaint.

Family and child accounts

Accounts for children are usually opened and controlled by a parent or guardian, with the child as beneficial owner. Who legally owns the assets, who can withdraw, what happens at the age of majority and how the account is taxed all vary by country and by account type, so confirm the rules for each product before you design the permissions.

The software needs a richer model of people and roles than a single-owner app. A guardian manages; a child may have a view-only login; grandparents may want to contribute, which raises questions about third-party payments and identity checks on the payer. Children’s personal data usually attracts stricter data protection rules, and the handover at adulthood needs its own journey, including fresh identity checks and new terms.

Lending against a portfolio

Letting customers borrow against their investments, through margin or a securities-backed line of credit, adds a credit product to an investing app. It brings its own regulation, affordability and disclosure rules, and a different risk profile. In the United States, FINRA’s investor guidance on securities-backed lines of credit sets out the main risks plainly: market falls can force the sale of holdings, losses can be magnified, and there can be unintended tax consequences.

The engineering centre of a lending feature is collateral valuation. You need current prices for every pledged holding, a loan-to-value calculation per security type, clear thresholds for warnings and calls, and a process for what happens if the customer does not respond. Customers must see their borrowing headroom and the price level at which they would face a call, in plain language, before a market fall rather than during one.

Regulatory reporting and record keeping

Depending on your licence and your partners, regulatory reporting may include transaction reports, client asset reconciliations, complaints data, financial returns and tax reports. Much of it can be delegated to a regulated partner, but you will still need to supply accurate data on time.

The habits that make reporting manageable are the same ones that make the platform trustworthy. Record an audit event for every significant action, keep immutable records of orders, executions and money movements, make reference data such as products and fees effective-dated, and build reports from a reporting store rather than live tables. When a regulator asks what happened to a customer’s account on a given day, you should be able to answer from data, not from memory.

App store review for finance apps

The app stores treat financial apps as a special category. Apple’s App Store Review Guidelines say apps for financial trading, investing or money management should be submitted by the financial institution performing those services, with the necessary licensing for every location where the app is available, and that apps in highly regulated fields such as banking and financial services should come from a legal entity rather than an individual developer. Google Play requires every app with financial features to complete a financial features declaration in Play Console.

In practice this shapes your release plan. Decide early which legal entity publishes the app, and if you work with a licensed partner, whether that changes the answer. Prepare a reviewer account with realistic data and the ability to pass onboarding, keep evidence of your licences ready, and allow time for questions from reviewers before your launch date.

Classic failure points

Most investing apps that run into trouble do so in predictable places. None of them is about the visual design of the trading screen.

Our team has shipped regulated investing software, and in our experience these problems are far cheaper to design out at the start than to fix once customers hold assets on the platform.

• An internal ledger that cannot be reconciled with the custodian, so nobody can say with certainty what each customer owns.
• Suitability or appropriateness answers stored without the questionnaire version, so past decisions cannot be explained.
• One balance shown for cleared cash, unsettled trades and pending withdrawals.
• Projections and returns that show the best case as the expected case.
• Engagement features that reward trading frequency, discovered by a regulator rather than by your own review.
• Market data costs that grow with every new user because licensing was not modelled.
• An app submitted by the wrong legal entity and rejected a week before launch.

Questions

Sources

1. FATF: Guidance on Digital Identity (March 2020)
2. ESMA: Final guidelines on MiFID II suitability requirements
3. FINRA: Rule 2111 (Suitability)
4. FCA Handbook: Client Assets Sourcebook (CASS)
5. SIPC: What SIPC protects
6. OECD: Consolidated text of the Common Reporting Standard (2025)
7. Investor.gov: Past performance not indicative of future results
8. SEC: Request for information on digital engagement practices (2021)
9. FINRA: Securities-backed lines of credit explained
10. Apple Developer: App Store Review Guidelines (3.2.1 and 5.1.1)
11. Google Play Console Help: Financial Services policy