The North American Securities Administrators Association recently adopted its model rule for business and succession plans, which, while not mandatory, provides a roadmap for those states that choose to regulate succession planning for advisors.
NASAA's model rule became effective on April 13, and can now be adopted by individual states well as the Canadian provinces, Mexico, the District of Columbia and Puerto Rico. The effective date will depend on the adopting state or region.
"At the time that the individual state adopts the rule, it will be available to administer as a requirement of books and records or fiduciary practice," Patty Struck, Wisconsin securities administrator, told ThinkAdvisor on Tuesday.
The Securities and Exchange Commission's Division of Investment Management is also developing succession plan rules for RIAs that would be mandatory.
The NASAA rules are designed to help an investment advisor "create a plan," NASAA states, with both the model rule and guidance written pursuant to Section 203 of the Uniform Securities Act of 1956 and Section 411 of the Uniform Securities Act of 2002.
Such plans should provide for at least the following: The protection, backup and recovery of books and records; alternate means of communications with customers, key personnel, employees, vendors, service providers (including third-party custodians), and regulators, including, but not limited to, providing notice of a significant business interruption or the death or unavailability of key personnel or other disruptions or cessation of business activities; office relocation in the event of temporary or permanent loss of a principal place of business; assignment of duties to qualified responsible persons in the event of the death or unavailability of key personnel; and otherwise minimizing service disruptions and client harm that could result from a sudden significant business interruption.
