Live! From TD Ameritrade Institutional: Keep emergency plans updated, or face disastrous consequences from regulators

Compliance expert notes advisers should stress-test plans yearly and document everything

Jan 30, 2014 @ 9:36 am

By Liz Skinner

Financial advisory firms need to think seriously about disaster planning and should be conducting annual tests of their preparedness plans if they want to stay out of hot water with regulators.

Each year, registered investment advisers need to document the testing of their continuity plan, as well as any updates to these plans, Les Abromovitz, a senior consultant at National Compliance Services Inc., said at a pre-conference session at TD Ameritrade Institutional's national conference in Orlando on Wednesday.

Plan tests should show that everyone at the firm knows what they are going to do in the event of a disaster and they know where alternative business locations are, he said.

"Just having the plan isn't enough," Mr. Abromovitz said. "You have to show it's realistic and that you've thought about all the possibilities."

Adviser continuity plans came under increased scrutiny after Hurricane Sandy, when the impact on New York and New Jersey closed markets for two days. Some advisory firms in the Northeast remained closed for up to a week due to power outages and other communications and transportation challenges.

"Don't be afraid to say you made changes. SEC examiners like to see that you are trying to improve the plan," he said.

One adviser at the session said the Securities and Exchange Commission was impressed when she added contingencies for a pandemic that made everyone in the office ill.

"Be proactive, and don't just stock up on toilet paper before a storm," Mr. Abromovitz said.

Contact clients to see if they need any cash, move electrical equipment to a higher floor and consider getting a hotel room for key personnel and client data if a significant storm is coming, Mr. Abromovitz said.

"This is no time to roll the dice and hope you're missed by an approaching event," he said.

Business continuity documents also should include preparations for the death of key employees, Mr. Abromovitz said.

"It's important for examiners to know you have a succession plan in place, especially if you are a solo practitioner," he said. "A registered person must be available to take care of clients."


What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video


Top questions surrounding future of DOL fiduciary rule

Reporter Greg Iacurci and managing editor Christina Nelson discuss the biggest uncertainties springing from the Fifth Circuit Court of Appeals' decision to vacate the regulation.

Latest news & opinion

DOL fiduciary rule likely to live on despite appeals court loss

Future developments will hinge on whether the Labor Department continues the fight to remake the regulation its own way.

DOL fiduciary rule: Industry reacts to Fifth Circuit ruling

Groups on both sides of the fiduciary debate had plenty to say.

Fifth Circuit Court of Appeals vacates DOL fiduciary rule

In split decision, judges say agency exceeded authority.

UBS, after dumping the broker protocol, continues to see brokers come and go

The wirehouse has seen 14 individuals or teams leave and five join for a net loss of $2.4 billion in AUM

Merrill vets ready to recharge breakaway recruiting efforts

After regrouping in wake of broker-protocol exits, Snowden Lane Partners is ready to recruit wirehouse brokers and RIAs.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print