Pinnacle Advisor Solutions will limit the number of agreements and institute a one-time administrative fee to accommodate a dramatic increase in demand for its PRISM (Continuity Planning) and PRISMPlus (Succession Planning) solutions in response to new regulatory rules that will require independent RIAs to have a formal continuity and succession plan.
Pinnacle Advisor Solutions and partner Michael Kitces have been longstanding advocates for the adoption of continuity and succession plans by independent RIAs to ensure their clients and their family are cared for in the event of an advisor’s death or disability. In April of this year, the North American Securities Administrators Association (NASAA) issued a model rule that requires state regulated RIAs to implement a formal continuity plan. States are expected to adopt the model rule over the course of 2015 and 2016. The new rule will impact an estimated 13,000 state-regulated RIAs. The SEC is anticipated to issue its own formal rule in late 2015.
Most RIAs have failed to adopt a plan because they are too busy. Moreover, no advisor believes they will be “hit by the bus” tomorrow. The new regulatory rule has therefore produced considerable demand for a simple, institutional, no risk solution that will provide clients and family the protection they deserve while also meeting regulatory requirements. Since April, Pinnacle has experienced a significant increase in inquiries that are now converting to agreements.
• PRISM. A simple, institutional, no risk continuity planning solution that becomes effective only in the event of an advisor’s death or disability. The day-to-day operation and ownership of the RIA otherwise remains unchanged. This solution addresses (a) the need to provide clients with a smooth transition to a new wealth manager upon death or disability, (b) the desire to confer the market value of the RIA to family/beneficiary and (c) the freedom to change directions down the road. PRISM is 100% revocable at any time and for any reason.
• PRISMPlus. A succession planning solution that seeks to address a planned exit from the business at a future date in addition to providing protection against death or disability. In anticipation of a voluntary exit, a RIA enters a strategic partnership with Pinnacle Advisor Solutions and transitions clients to the Pinnacle platform. Clients become accustomed to Pinnacle’s private labeled solutions while the advisor is relieved of the busy work associated with investments, operations, compliance and other activities. The advisor may then reinvest that time in client facing activities or lifestyle during the advisor’s end of career years. Most important, the advisor retains 100% independence, 100% of firm equity and income and 100% of the client relationship.
Pinnacle has decided to limit the number of agreements it will offer in order to guarantee that Pinnacle will always possess the capacity to properly serve inherited clients in the event of death or disability. One of the most overlooked due diligence requirements by RIA owners is ensuring a successor firm has the capacity to care for their existing clients, plus a large group of new clients.
In addition, Pinnacle will institute a one-time $1,000 administrative fee to offset the cost of the program, effective November 1, 2015. Pinnacle believes the fee is nominal when compared to the substantial value the firm will realize in the event of the death or disability of the advisor. For example, the family of an owner of a RIA firm with $50 million AUM RIA could expect to receive payouts of $1.0 – $1.5 million.
For further information about PRISM or PRISMPlus, contact Tim Mascari, Associate Director of Strategic Partnerships at (443) 832-1620 or at firstname.lastname@example.org.
Pinnacle Advisor Solutions is the leading provider of business solutions to independent advisors with $10 – $300 million in assets under management nationwide. The firm offers a unique strategic partnership solution that provides time-constrained advisors with the investment, operations, marketing, coaching and continuity planning solutions they need to move their businesses forward without forfeiting their independence. Pinnacle Advisor Solutions is a division of Pinnacle Advisory Group, a national award winning independent wealth management firm serving more than 1,100 families and managing more than $1.8 billion of their wealth.