He said it is important for advisors to understand that a good continuity plan is not something in their heads or a form filed “with a broker-dealer or other party that states ‘here is where my clients will go.’”
It must be a formal written document completed by an attorney, Doherty said. He said they have seen a lot of DIY efforts sourced from templates that advisors may have gotten from their broker-dealers or found online and thought it was OK to complete. “Well, those templates generally say all over them ‘do not do this without the help of an attorney, and there is good reason for that. They generally omit the terms of the deal.” Doherty added that the agreement also should be supported by a current practice valuation.
Once the written plan is in place, Doherty said it must be communicated to others, the one step that is most often overlooked and not executed, he said. “So, it certainly should be communicated to your client, staff, family, probably a state attorney as well, and all those people should know exactly what will happen if there is a triggering effect.” He added that the plan documents should be securely stored and available to the key people who need to execute them.