Continuity Agreement for Financial Advisors: What It Must Say and Who Signs

The short answer: A continuity agreement is a written arrangement, usually with another advisor or firm, that names who takes over client relationships and firm operations if the owner dies, becomes incapacitated, or leaves suddenly, and how that party pays for the practice. It covers the unplanned exit and is narrower than a full succession plan.

The need is measured. Cerulli Associates reported on August 4, 2026 that about 35% of financial advisors, who manage 40% of industry assets, plan to retire within ten years, and that more than a quarter of them are unsure of their succession plan. In research released September 14, 2026, Edward Jones and Morning Consult found that 42% of 233 surveyed advisors have a fully documented, legally formalized succession plan in place. The retirement wave is the backdrop. Winthrop's guidance for an advisor with no plan, set out in succession without a successor, is to put a continuity agreement in place first, drafted with counsel, before any valuation or sale process.

What does a financial advisor continuity agreement have to say?

The agreement has to answer seven subjects in its own text.

Triggers and who serves. FINRA's Notice 22-23 asks whether an agreement defines temporary and permanent incapacity and the consequences of each, names back-up successors if a named party is unavailable or unwilling, and says what happens on the death of anyone named in it, successors and beneficiaries included. It also names regulatory events that can require a representative to terminate a registration among the events to plan for. NASAA's guidance adds that a person cannot provide advisory services for compensation without registration with the state securities regulator or an exemption, so the named party has to hold the credentials the work requires.

Authority. This clause decides whether the named party can act on day one. NASAA's guidance for state-registered advisers says that when a sole proprietor dies or is permanently disabled, the proprietorship may legally terminate, and powers of attorney, advisory contracts and other client agreements would end with it. The owner may also be the only regulatory contact and the only person able to open the electronic client files. A party who steps in cannot simply take over the contracts: section 205(a)(2) of the Advisers Act requires an SEC-registered adviser's advisory contract to provide that it cannot be assigned without the client's consent, and section 202(a)(1) defines assignment to include a transfer of the contract or of a controlling block of the adviser's voting securities. NASAA notes that a state may allow a client to give a prearranged consent that takes effect only on a stated event, and tells advisers to check with their home state first.

Records follow the same logic. If the named party will see confidential client information, NASAA says the adviser must have prearranged client authorization to share it. Regulation S-P's exceptions to its notice and opt-out requirements include disclosure with the consumer's consent or at the consumer's direction, and disclosure in connection with a proposed or actual sale or transfer of a business that concerns only that business's consumers. Counsel decides which route applies.

Pricing. Choose a method and write it down: a formula on trailing recurring revenue, an appraisal by a named independent valuer as of the trigger date, or a fixed price reset on a schedule. Then say how the price moves if clients leave before the transfer completes and who funds the purchase. How size changes what a practice commands in a sale is covered in the scale premium. For broker-dealer representatives, FINRA's notice adds the production side: which accounts sit under joint versus individual production codes, and the commission percentage each representative receives over the transition.

Duration and notice. The interim period needs an end, and a review date keeps the terms from aging. NASAA's guidance asks whether the owner can restore previous accounts after a temporary disability, who will tell clients of a death or disability, whether the plan belongs in Form ADV Part 2A or the advisory agreement, and whether every client gets a copy of the plan or only the name of the person who will call.

Who signs a continuity agreement, and how does it differ by channel?

An RIA owner. The owner signs with the receiving advisor or firm, and the firm's entity documents have to agree with it. NASAA's guidance warns that an advisory firm owned by one or more people may dissolve automatically on an owner's death, ending client contracts, or that an owner's interest may pass to an heir unable or unwilling to perform the business functions. At an SEC-registered firm where the owner also serves as chief compliance officer, Rule 206(4)-7 still requires a designated supervised person to administer the firm's policies, so the agreement can name who takes the role and how that person becomes a supervised person of the firm; state-registered firms follow their state's rules. The compliance officer guide covers who can hold the role.

An independent broker-dealer representative. The broker-dealer is the FINRA member, so its own continuity plan and supervision apply to the practice. Notice 22-23 says a key-person event such as a registered person's illness, incapacity or death could trigger the firm's plan, depending on the person's role at the firm. The notice also asks whether a firm requires formal written succession agreements, reviews them against firm procedures, the securities laws and FINRA rules, and addresses a succeeding representative's access to its systems. The practical step is to ask the broker-dealer for its written program, learn what it reviews, and have counsel draft the agreement to fit. A representative who also runs an advisory firm of their own has that firm's compliance program to align as well.

A wirehouse or employee advisor. The client relationships usually sit with the firm, so the documents that decide what happens on death or disability are the firm's own policy and any retirement or sunset program, and a private agreement between two employees has limited room to move what the firm holds. Have counsel read the employment, deferred compensation and account agreements first, and ask the firm in writing what happens to the book and the clients if you die or become disabled. Do you actually own your book of business sets out what is yours in each channel.

What do the rules actually require?

Three bodies of rules frame the question, and the SEC's attempt to write one for advisers was never completed.

The SEC's 2016 proposal. On June 28, 2016, the SEC proposed in Release IA-4439 a new Rule 206(4)-4 that would have required every SEC-registered adviser to adopt a written business continuity and transition plan and review it at least annually. It would have included a transition component for winding down or transferring the business if the adviser could no longer provide advice. The proposal was never adopted. The SEC's Fall 2017 entry in the federal regulatory agenda lists it as withdrawn on September 13, 2017, and FINRA's Notice 22-23 records that it was not adopted.

Rule 206(4)-7. The rule that does apply to an SEC-registered adviser is the compliance-program rule. It makes it unlawful to provide advice unless the firm adopts and implements written policies and procedures reasonably designed to prevent violations of the Advisers Act and its rules, reviews them at least annually, and designates a supervised person to administer them. Continuity enters through the SEC's 2003 adopting release, IA-2204, which lists business continuity plans among the issues a firm's policies should address to the extent relevant, and a footnote ties the adviser's fiduciary obligation to protecting clients if the adviser cannot provide services after, for example, a natural disaster or, at some smaller firms, the death of the owner or key personnel.

State-registered advisers. NASAA's 2015 model rule, folded in 2020 into its consolidated policies-and-procedures model rule, calls for a written business continuity and succession plan, including assignment of duties to qualified responsible persons if key personnel die or become unavailable; the consolidated rule, adopted November 24, 2020, carries it in section (a)(7). It binds an adviser only where the adviser's state adopts it, NASAA's guidance says state rules may differ, and NASAA notes a state may read an adviser's fiduciary duty to require a plan even without a specific rule.

FINRA Rule 4370. For broker-dealers, the rule requires each member firm to keep a written business continuity plan for emergencies and significant business disruptions, update it on any material change and review it annually. Its ten minimum elements cover data back-up and recovery, mission-critical systems, alternate communications and locations, regulatory reporting, and how customers keep prompt access to their funds and securities if the firm cannot continue. The duty sits with the firm, and none of the ten elements names the death or incapacity of an individual representative. Notice 22-23 says FINRA rules do not require firms or representatives to adopt separate succession plans, and that a key-person event could be the emergency that triggers the firm's plan.

The agreement itself is a legal document, and drafting and reviewing it is a job for counsel.

How does a continuity agreement fit into a full succession plan?

A succession plan covers a planned exit: the successor or buyer, how the purchase is financed, the valuation date, the timeline and the tax result. A continuity agreement covers an unplanned one. The party named in a continuity agreement is often the natural staged buyer in a planned sale, so the price terms written for an emergency become the starting point for that later negotiation and deserve a review when it begins.

What gaps show up most often?

NASAA's guidance and FINRA's questions for firms point to the same weak spots.

• One person holds every key. The owner is the only regulatory contact, the only person with access to the Form ADV filing system and the client files, or the only person with authority at the custodian.
• The contracts end with the owner. Advisory contracts and powers of attorney tied to an individual can end on death or permanent disability, and entity documents may dissolve the firm or pass the interest to an heir who cannot do the work.
• No consent path. Nothing says how clients consent to an assignment or authorize the sharing of their information.
• Incapacity is undefined. "Unable to work" has no definition, no period and no route back if the owner recovers.
• No back-up, and an aged price. The named party is the only name, and the terms were set years ago and never reviewed.
• Clients never hear of it. No client knows who would call.

A first version can be short, and each clause above can be added at the next review.

Who should sit on the other signature line, and what the practice is worth to them, depend on the book of business and the channel the practice sits in, and the specific answer comes from a conversation about what the right fit would look like, drawing on Winthrop's relationships and record of past deals. Founders weighing the sale side can start with Winthrop's succession planning work. The firm on the other side of the deal pays Winthrop & Co., and the advisor never pays. Request an Introduction.