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Continuity planning: Protect your clients & practice

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Succession planning is an oft-discussed topic in the advisory industry, but there is another important, and perhaps less complicated, way to protect a practice: continuity planning.

Financial advisors should be thinking about business continuity -- maintaining their business and protecting clients -- and not just succession planning, which is about exit strategies, says Rusty Vanneman, chief investment officer of Omaha, Neb.-based CLS Investments.

“A solid relationship and trust with clients is the cornerstone for [registered investment advisors], and that makes it imperative that advisors focus on more than just handing off their book,” he says.

“Having a plan in place to protect clients for ‘what if something happens to me’ is a key piece of a long-term continuity plan,” says Sean Lee, founder and president of SPL Financial, an advisory firm in Murray, Utah. “Once clients know we’ve put a plan in place, it becomes a nonissue and brings them peace of mind.”


A continuity plan has to be a simple process for the client to understand and laid out in written form, Lee says.
As part of that written process, it should become a seamless transition into succession planning, he says.
Simplicity is definitely a key ingredient, says Craig Stuvland, president and chief executive of tru Independence, a consulting firm in Portland, Ore., that helps advisors break away from wirehouses and become independent.

“A continuity plan should start simple by framing out how unexpected interruptions could negatively affect your business and what can be done to protect the interests of the business, employees and clients,” he says. “If you go through that process, you can identify the risks and proactively plan for them. “

Examples of such risks could be a long-term illness of a firm employee, the possible consequences of a key staff member leaving, and the need to continually review the technology and management system.

“A well-thought-out continuity plan naturally makes succession planning much easier as the risks to the business have been thoroughly thought through,” Stuvland says.


Independent broker-dealer Securities America, a subsidiary of Miami-based Ladenburg Thalmann Financial Services, introduced a continuity program for its 1,800 advisors in 2012. Since then, the broker-dealer has doubled the number of advisors who have filed a continuity plan with the firm.

Securities America regards continuity planning as an important component of an advisor’s risk management program, says Roger Verboon, director of practice succession and acquisition.

“Succession planning is a necessity for independent advisors to plan for their own retirement, but continuity planning will cover them in the time between now and that retirement,” he says.

Securities America, based in La Vista, Neb., has been holding “continuity awareness” sessions and other events with advisors to promote its continuity program. It is also providing educational materials, agreement templates and other resources to get a written plan on file.

The firm has designated October “Continuity Planning Month.”

Bruce W. Fraser is a financial writer in New York and contributor to Financial Planning magazine.

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