In its investigations, NASAA must have recognized what many industry observers already identified as a problem: Many small advisors have no contingency plans in place.

“I think most folks have a strong interest in having something in place, but there always seems to be something more important to do,” McGratty says. “That or they don’t really think that something might happen. Nobody thinks they’re getting hit by the bus tomorrow.”

NASAA rules would also likely eliminate the kind of ad-hoc succession and contingency plans many advisors engage in—plans to have their clients assumed by a peer, galvanized by a handshake. Instead, plans would have to minimize service interruptions and client harm.

McGratty says that the SEC is poised to follow NASAA’s lead.

Under the PRISM plans, if a solo-practitioner or member of a small ensemble group dies or suffers a debilitating disability, their practice will be picked up by Pinnacle Advisory Group, allowing clients continual service.

“We will step in and the wealth manager’s clients to offer them the opportunity to become clients with Pinnacle Advisory Group,” McGratty says. “Until that point, though, it is a contingent solution that only kicks in in the event of death or disability, it has no other impact on the wealth manager’s firm.”

At the same time, Pinnacle pays for its contingency acquisitions—disabled advisors or, in the case of death, their survivors, would receive 25 percent of their annual revenues for six years after Pinnacle takes over their book.

“There’s very clearly value in these practices that they’ve been building that in the absence of a formal plan would disappear,” McGratty says. “There’s no reason that value shouldn’t be conferred on their family or their estate.”

Finally, unlike other succession solutions, Pinnacle’s PRISM plans are revocable.

“Generally speaking, most wealth managers prefer internal succession plans, and we recognize that,” McGratty says. “If they find a junior wealth manager who they want to form an internal succession plan with, they can always rescind the agreement.”