What happens in the event an adviser in a single adviser practice is unable to work for an extended period of time?

We would expect the Financial Adviser will have personal protection which will provide cover for them and their family however what happens to the business?

The Financial Planning industry landscape has changed over the years and we are now in a world of opt-in and Annual Advice Agreements which clients sign upon their review to re-engage their adviser and continue paying their fee.

If your client does not renew the ongoing service arrangement during their renewal period the ongoing fee arrangement will terminate 30 days after the end of the renewable period, which is 150 days from the clients anniversary date. This means should the adviser be unable to fulfil their client review obligation they will have to turn off that clients fee. Should the adviser be unable to work for an extended period this could have a catastrophic impact on their business revenue.

Is there a solution?

If a single financial planner advisor is unable to work, there are several options available to ensure that their clients continue to receive the necessary financial advice and support.

1. Succession Planning:  You may have a succession plan in place, which outlines what should happen in the event of your incapacity or death. This plan typically involves appointing a successor advisor or team who will take over the management of the clients' portfolios and continue to provide financial advice and support.
2. Referral to another Advisor:  You may refer your clients to another trusted advisor or advisory firm who can provide the necessary financial advice and support in their absence.
3. Continuation of the Practice: You may opt for Corporate Authorised Representative (CAR). The CAR is authorised to provide financial advice and services to clients on behalf of the licensee.  This means that the CAR can take over the management of your client's portfolio, including conducting reviews and making investment decisions, in the event that you are  unable to do so.
4. Client Buyout: You may have a buyout agreement in place that outlines what should happen in the event of your incapacity or death. This agreement typically involves a buyout of your practice by another advisory firm or individual.

Your Financial Planning Manager can work with you to ensure you have the right contingency plan in place to ensure that your clients are well taken care of in the event of your absence.  This can provide peace of mind to both you and your clients.