Business Continuity Plans Required for Financial Advisors


Proposed rule requires BC planning

Last month, the SEC unanimously proposed a rule that would require registered investment advisors to have written business continuity plans. The intention is to provide protection for advisory firm clients in the event of a major interruption to the regular operations of the business, including the death or incapacitation of an advisor.

“While an adviser may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and in some cases, minimize the likelihood of their occurrence, which is an objective of this rule,” said SEC Chair Mary Jo White. “This is the latest action in the Commission’s efforts to modernize and enhance regulatory safeguards for the asset management industry, which includes rules previously proposed that would modernize the information reported to the Commission and investors, enhance fund liquidity management, and strengthen the regulation of funds’ use of derivatives.”

The plans need to preserve the continuity of the firm’s services in the event of a natural disaster, cyberattack, technology failure, departure of important personnel and other such events, according to the proposed SEC rule. It would require advisers to annually review those plans and retain related records.

Securities regulators began looking at the need for such a rule after some financial advisory firms had trouble bouncing back after Hurricane Sandy in 2013.

Armada Cloud assists our clients in the creation, modification, or review of business continuity and disaster recovery plans to ensure that business operations can continue with minimal downtime in the event of a disaster or other interruption; our onsite purpose built data protection appliance provides local restore points and the latest copies of your VMs, while our redundant datacenter sites offer offsite data recovery points and remote VM hosting.

Contact us to review or create your business continuity plan today.

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