Natural disasters like Hurricanes Helene and Milton are stark reminders that we should always prepare for the worst. During these and other natural disasters, it’s not uncommon for clients to need access to funds, which means they need access to you. A strong business continuity plan is essential for financial advisors to maintain business operations and assist their clients when unexpected circumstances arise.
A BCP is a must for regulatory compliance and many insurance policies, and having one in place ahead of time reduces the stress of servicing your clients during an emergency. To ensure you are prepared, begin by evaluating your existing plan for practicality and accessibility.
Where is it saved? Who has access? Can access be disrupted by a power or tech outage? Do you have a generator to keep your office powered? If not, are employees empowered with the tools they need to work remotely for an extended period?
Here are four key steps that financial advisors should take to button up their BCP:
- Consider the most likely disruptions: It’s impossible to predict the unpredictable, but if you’re in a region susceptible to hurricanes, tornadoes or flooding, you should prepare for such disasters. Whether it’s a tech failure, widespread weather event, power outage or anything else, it’s best to talk through these scenarios with your team ahead of time. Identify the handful of business activities that are top priorities because, depending on the severity of the crisis, you likely won’t be able to maintain business as usual.
- Identify what you need and how you’ll access it: After you’ve identified your critical activities, you need to determine what is needed to keep those activities online. This can include access to key contact lists and backup power. As an advisor, you’ll need to be able to quickly contact your employees and clients to make sure they are safe and help with time-sensitive requests like accessing or transferring funds. Saving contact lists in a different location and ensuring your employees are equipped to work remotely are things you can do in advance. It’s also important to know who your critical partners are and how to connect with them in an emergency.
- Complete a test run: Your plan will be most effective if every person you work with is familiar with their responsibilities. For example, delegating all employee communications to one individual will ensure the team is on the same page. The same can be done with client communications. The key is to avoid waiting until you hear sirens to activate the plan. Make sure to practice regularly to confirm all aspects are still relevant and executable.
- Establish a backup plan: If all else fails, another trusted advisor may be enlisted to connect with your clients. Have conversations in advance with members of your network and your relationship manager at your broker/dealer in the off chance your team is completely down. This will safeguard your relationships with clients and position them as a top priority.
Business disruptions are unexpected by nature, and small businesses are typically most vulnerable to severe impacts. It’s imperative that advisors are prepared, and free resources such as Ready.gov are available to help make planning a bit easier.
A well-thought-out BCP protects client relationships and ensures the business is functional regardless of the circumstances. Proactively reassess your BCP plan to avoid panic in times of emergency.
Casey Sabnis is the senior vice president of risk management at LPL Financial.