FINRA Releases Regulatory Notice Urging Advisors To Prepare Succession Plans

Posted on November 15th, 2022 at 1:12 PM
FINRA Releases Regulatory Notice Urging Advisors To Prepare Succession Plans

From the Desk of Jim Eccleston at Eccleston Law.

The Financial Industry Regulatory Authority (FINRA) is urging financial advisors to establish a succession plan incase of unexpected life events as an increased number of advisors near retirement.

As of December 2021, 16.3% of advisors were 60 and older, while 8.2% were 65 and older, according to a recent FINRA regulatory notice. FINRA noted that the percentage of advisors in each of these brackets has increased over the past few years. FINRA outlined the benefits of “proactive succession planning”, which can serve to benefit the clients, member firms and advisors themselves, according to the notice.

FINRA’s notice provides an example of a smaller firm whose chief compliance officer and Financial and Operations Principal (FinOp) unexpectedly died during one weekend. According to FINRA, “The firm had a succession plan in place that, among other things, promptly notified FINRA of the situation and engaged a recruiting firm to hire a new CCO and FinOp. As a result of the firm’s proactive planning for these events, the firm successfully continued operations without any interruptions in service to its customers.” Furthermore, the notice discusses common types of succession plans and provides an overview of relevant FINRA rules regarding succession plans.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, finra, cco

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