Business Continuity Planning for Financial Advisors

Helping your clients develop comprehensive financial plans often involves asking a lot of ‘what if’ questions. What if you get sick and need to retire earlier than expected? What if your spouse passes away unexpectedly? Applying that same approach to your own firm can ensure that you’re prepared for situations that might threaten your business operations. A business continuity plan can help you identify potential disruptions and establish how your firm will respond if they occur.

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Business Continuity Planning vs. Succession Planning

A business continuity plan is a written plan detailing instructions or procedures for maintaining operations in the event of major disruption. Business continuity plans can cover a variety of scenarios, ranging from natural disasters to cyberattacks.

Business continuity planning often goes hand in hand with business succession planning. Approximately 42% of advisors have a documented succession plan, according to a 2026 Edward Jones survey. ¹

The difference between business continuity planning and succession planning is the focus. With continuity planning, the primary concern is ensuring that your firm can continue operating compliantly at all times. With succession planning, you’re strategically planning for your (or another key person’s) eventual exit from the business.

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Business Continuity Plan Requirements for Advisors

Registered investment advisors (RIAs) must maintain written compliance policies and procedures under SEC Rule 206(4)-7. The rule requires RIAs to adopt and implement written compliance policies and procedures. In adopting the rule, the SEC said it expected those policies and procedures to address business continuity planning to the extent relevant to the advisor.

The North American Securities Administrators Association (NASAA) has adopted a model rule requiring investment advisers to establish, implement and maintain written business continuity and succession plans. State-registered advisers may be subject to those requirements in states that have adopted the rule.

FINRA rule 4370 requires registered broker-dealers to maintain a written business continuity plan that covers emergencies and other scenarios that could cause significant business disruption. Broker-dealers have some flexibility in creating the plan, but there are certain requirements they must meet. FINRA offers a helpful template that broker-dealers can use to create their plans. ²

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How to Create a Financial Advisor Business Continuity Plan

Creating a continuity plan for your advisory business can help your firm prepare for potential disruptions, and it’s a fairly straightforward process. Here are some common tips for formulating your firm’s plan:

Understand Regulatory Requirements

What you include in your business continuity plan depends on which regulatory guidelines apply. If you’re a state-registered advisor, you’d follow the NASAA’s model rule; broker-dealers would follow FINRA’s instructions. SEC-registered advisors can use the framework established under Rule 206(4)-7.

Start With Risk Analysis

Conducting a risk assessment can help you determine which threats or contingencies you may need to plan for. For instance, your firm’s geographic location may dictate how vulnerable you are to floods, wildfires or other natural disasters. Consider how likely your firm is to be impacted by extended power or internet outages, cyberattacks or the loss of a key person, either temporarily or permanently.

It’s also important to consider time frames. Some emergencies may be short-lived, lasting just a few hours or a day at most, while others may take days, weeks or even months to resolve. In the worst-case scenario, the disruption is indefinite, which can result in the permanent closure of the business.

Document Your Policies and Procedures

The core of your continuity plan should answer some key questions about how your business will handle emergencies.

• What are the most essential functions of the business that must continue, even during periods of disruption?
• Who are the key people in the business and who is equipped to assume their roles should the need arise?
• What would need to happen and in what order to bring the business back online following a disruption? How quickly would that need to happen?
• Who needs to be contacted and in what order should a disruption occur?
• How will communications be handled if phone calls and email are not an option?

Answering these questions in detail can help you shape your policies and procedures. Including step-by-step instructions or checklists and denoting which members of your team are responsible for handling specific duties can help make your plan thorough and easy to follow.

Test and Train

Once you’ve finalized your plan, consider stress testing it with a sample scenario. For example, if you’re located on the West Coast, you might simulate the impacts of a significant earthquake that disrupts power and internet service. Or you might create a scenario involving a cyber attack, which is also an opportunity to test your firm’s cybersecurity policies.

Testing can provide hands-on training, though it may be beneficial to schedule separate training sessions. That way, you can walk your team through each section of the plan in a low-stakes, low-stress environment, leaving room to answer any questions they might have.

Frequently Asked Questions (FAQs)    

Bottom Line

Business continuity plans can be an invaluable addition to your firm’s overall business plan and succession plan. Expecting the best but planning for the worst can reduce the likelihood of your firm being completely derailed by an unforeseen event.

Tips for Growing Your Advisory Business

• Automating business processes can help you operate more efficiently and reclaim valuable hours in your day. If you’re interested in automating some of your marketing activities, SmartAsset AMP can help. This intuitive platform is designed to help you generate more leads while leaving you free to focus on other aspects of running your business. Schedule a demo to learn more about how it works.
• If you’re also interested in creating a succession plan for your firm, you may need to consider purchasing key person insurance. Key person coverage is designed to protect you against financial losses resulting from the loss of someone instrumental to your business. Comparing coverage options and rates can help you find the right policy.

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