TRANSITION TALK

SEC Proposed Rule 206(4)-4 & Proposed Amendments to Rule 204-2 Business Continuity & Transition Plans

Posted by Marcus Hagood on Oct 18, 2016 3:37:25 PM
SEC_Banner.jpg

In past years, the slow and steady migration of independent financial service providers to the independent Registered Investment Advisory (RIA) channel has been well documented. As the number of state and SEC registered advisors continues to swell, the regulatory framework under which they have operated will undoubtedly become increasingly complicated.

For years, it has been the practice of regulators to primarily focus their attention on the largest players in our industry. Broker Dealers, Custodians, and product producers have, by and large, borne the responsibility of complying with our industry rules, if not in actual operation, then through procedural and compliance oversight of the independent producer. Call it the cost of success, but the regulatory bulls-eye is–without question–moving more and more toward the independent financial service provider. A perfect example of this is the SEC proposed Rule 206(4)-4 and amendments to Rule 204-2 for “Business Continuity and Transition Plans.”

DISASTER PREPARATION

After finding that many RIA firms were not well prepared in the aftermath of Hurricanes Katrina and Sandy, the SEC released alerts that practice owners should more closely review their disaster preparedness and continuity plans. Many of the new requirements under the proposed rules were to address shortfalls that were identified by these events in actual practice. Unfortunately, that guidance appears to be ignored by many whether through frustration, inability, or otherwise. Add to this, as FP Transitions has often pointed out, the substantial lack of Continuity Planning (death or disability planning) in our aging industry, and you have a perfect storm for regulatory intervention.

The Proposed SEC Rule 206(4)-4 and the amendments to Rule 204-2 are stepping in to address these apparent short falls in preparedness. Although many of these new regulations are considered within requirements that have long been in place for Business Continuity and Disaster Recovery under SEC Rule 38-1a and FINRA rule 4370, there are significant new requirements that are part of the language in the proposed rules and rule changes. Some of the highlights include:

Read More

Topics: Continuity Planning, Transition Plan, SEC, Securities & Exchange Commission

FREE Continuity White Paper

Posted by FP Transitions on Aug 11, 2015 9:30:00 AM

The single, biggest threat to a financial services business with one owner, or only one primary advisory, is not the lack of a succession plan. It is, in fact, the lack of a plan to protect the clients and the practice's value in the event of an owner's sudden death or disability.

Our FREE white paper, published earlier this year, compiles almost two decades of knowledge when it comes to continuity planning for financial professionals.

Read More

Topics: Continuity Planning

Decrypting Continuity [INFOGRAPHIC]

Posted by FP Transitions on May 5, 2015 1:06:00 PM

There is a lot to consider when crafting an effective continuity plan: partner, terms, triggering events, and clients expectations to name a few. This infographic below breaks down the most important elements of continuity planning to help tackling the process a little simpler.

Read More

Topics: Continuity Planning, Infographic

How to Jump to the Top of the Buyer List

Posted by FP Transitions on Apr 8, 2015 10:00:00 AM

If 95% of financial advisory practices have only one owner then most are–or should be–looking outside their own advisory for a continuity partner. You should be that partner, especially if your long-term growth strategies include acquisition.

Read More

Topics: Continuity Planning, Acquisition

Continuity Challenge #1: Finding a Partner

Posted by FP Transitions on Mar 30, 2015 10:41:09 AM

The single, biggest threat to the continuity of an independent financial services or advisory practice is the lack of formal plan to protect the clients, cash flow, and value in the event of the sudden death or disability of the primary advisor. And the biggest challenge to obtaining protection is finding a great continuity partner.

Read More

Topics: Continuity Planning

Securing Value for Your Future

Posted by FP Transitions on Feb 19, 2015 8:00:00 AM

It’s not just a financial advisor mentality; it’s a human mentality. We KNOW life is finite, but we don’t want to think about our mortality, and we certainly don’t want to plan for it. But, as an advisor, isn’t that one of your big pitches? Invest now, plan wisely, and grow wealth for the future. Provide for your heirs when you’re gone. You encourage every one of your clients to not only plan for their future, but to prepare for what comes after. That’s good advice.

 Download : Continuity Planning White Paper

Read More

Topics: Continuity Planning