The North American Securities Administrators Association, Inc. (“NASAA”) recently released a white paper detailing the results of a study conducted by its Senior Issues/Diminished Capacity Committee. While many investment adviser firms are increasingly aware of issues related to diminished capacity in clients, NASAA has found that not all registered investment advisers are prepared to identify and address diminished capacity among investment adviser representatives. As part of the study, NASAA surveyed a number of financial institutions and industry professionals including Bryan Hill, President of RIA Compliance Consultants, Inc.
August 31, 2009
Many individuals who operate their own registered investment adviser firms have a tendency to delay succession planning and deal almost exclusively with shorter-term business issues. However, succession planning is a critical issue, in particular, for a small registered investment adviser firm due to the risks that one key investment adviser representative could become unavailable, on either a temporary or permanent basis, to serve clients and operate the registered investment adviser firm. In the interest of both the investment advisory practice and its clients, it is critical to plan for continuity and succession of the registered investment adviser firm.