Continuity Planning in Case of Accidental Death, Disability or Diminished Capacity

Author: Brian Neil, Practice Management Consultant

Advisors often have tough conversations with clients about preparing for the unexpected yet fail to do the same for themselves. Questions advisors should ask themselves include:

  • What would happen if I was unable to perform my job for several days? Several weeks or months?
  • What would happen if I became disabled and could no longer run my practice? What would happen if I died?
  • Would clients be able to execute trades, request withdrawals or adjust their investment portfolio or financial plan?

Advisors who can’t adequately answer these questions likely need to create a business continuity plan.

Continuity Plans vs. Succession Plans

Many advisors are familiar with succession planning, which is an advisor’s strategy for transitioning their practice to another advisor after retirement. Continuity planning, on the other hand, refers to an advisor’s ability to continue serving their clients following an unpredictable event, such as an incident leading to the advisor’s disability, diminished capacity or even death.

How to Prepare for the Unexpected

Advisors routinely advise clients to plan for the unexpected by developing an estate plan to preserve their wealth and assets and protect their family. It’s important for advisors to do the same when it comes to their practice.

A business continuity plan ensures critical operations remain uninterrupted, no matter the situation. Let’s look at some steps an advisor can take to build a plan:

Find a Business Continuity “Partner” - This is another financial advisor that can step in to help protect an advisor’s existing clients, team and family in the event of sudden death or incapacitation. For advisors not currently partnering with another advisor, it may be prudent to execute a legacy agreement that names another financial advisor that agrees to take over if the unexpected happens. The agreement should explain under what conditions it will be triggered, and includes information about provisions to protect employees, how the advisor or family will be paid for the value of the business, and provisions to protect the advisor taking over. Advisors should also consider the cultural fit – including things like investment philosophy and approach – and the capacity of the “partner” advisor to serve the clients.

Develop Standard Policies, Procedures, and Processes Documentation – It's important to document how business is conducted with clients, so if something happens suddenly, the advisor or firm that is identified in the legacy agreement can easily step in and conduct business in a similar manner and can find information about the clients. This will reassure clients that the service and advice they have come to count on can continue, and the new advisor can implement their financial plan. As a result, the new advisor is more likely to provide support for most of the clients without interruption.

Make Sure Insurance Policies Are Up to Date – Similar to any business plan, ensure that any insurance coverage is up to date and offers adequate protection in the event of death, disability, or incapacity. This is another way to ensure the advisor’s family can live a similar lifestyle and fulfill financial obligations if the unexpected happens.

Share the Continuity Plan with All Stakeholders – Once a business continuity plan is in place, it is a best practice to share the plan with clients of the firm and other critical stakeholders. This will reassure clients that they will be taken care of if the advisor is no longer able to run the practice. For larger clients, it may make sense to introduce the financial advisor who will step in if something happens so they are familiar with them and can feel reassured that they will have a similar experience and service.

Review and Update the Plan Annually – Business continuity plans should be reviewed and updated at least annually to ensure that everything is up to date. This also provides an opportunity to review and update any policies and procedures. As part of this process, the advisors who have entered into the legacy agreement should meet periodically to review changes in the practice, procedures, approach to servicing clients, specific client needs, and tools utilized.

Creating a business continuity plan is an important step to protecting the clients and advisors of a business. It’s something every financial advisor should have, regardless of age, to protect the practice he or she has built and ensures employees and loved ones are taken care of if something tragic happens. Hilltop Securities offers support to advisors to assist with continuity planning, including sample legacy agreements and consultants who are available to discuss the process and answer questions.

For more information on business continuity planning and information on legacy agreements, contact Brian Neil, Practice Management Consultant, at or 214-953-4190.

To learn more about Momentum Independent Network, contact Wealth Management at or 833-4HILLTOP.

The paper/commentary was prepared by Momentum Independent Network (MIN). Momentum Independent Network, Inc. is a registered broker-dealer and registered investment advisor that does not provide tax or legal advice. MIN and Hilltop Securities are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, TX 75201, (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC

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