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As a financial professional, your number one priority is your clients’ well-being. While you work hard to secure their interests, unexpected challenges can sometimes hit at the worst of times. The good news is there are steps you can take today to make sure your clients are cared for and the value of your business is protected.

Make a Game Plan

While it’s never fun to consider worst-case scenarios, it can give you added confidence knowing you’ve laid out a contingency plan in advance.

  • Begin with your client experience. Step one is to consider what kind of service your clients expect. What if that day turned into a week, or longer? What functions would be most critical to giving them seamless, prompt service? What concerns might they have, and what could you do to address them?
  • Think short- and long-term. While you may be able to manage disruptions of a day or two with minimal interruptions to client service, you may need to prioritize a few key functions in a longer-term emergency. You might also need to reach out to your parent firm or other business partners for assistance.
  • Empower your staff. Staff members are often the unsung heroes in any crisis, and you’ll want to involve key employees in your planning process. Work together as a team to imagine some scenarios and create checklists of responses. You might want to set up a crisis management team to oversee staff training for unforeseen events, such as an office evacuation, extended power outage or other emergency.
  • Make your wishes known. Does your staff know what steps to take if something happens to you personally? Take some time to write down a set of instructions, including important contacts, passwords, insurance coverage, and financial information (including how to treat company stock).

Manage for Continuity

As a financial professional, you may handle many day-to-day operations yourself. But what happens to your business if you suddenly become unavailable or lose a core staff member? To ensure a consistent client experience, you might look for ways to systemize and document procedures such as client on-boarding or billing.

Many financial professionals are moving toward automating or outsourcing more functions, such as marketing, billing, or even portfolio modeling. In some cases, these services may already be offered by your parent firm. Such strategies have the added advantage of freeing up your time to spend on building your business — or just enjoying life. They can also create the kind of operational consistency potential buyers look for in valuing a financial services business.

Create an Emergency Succession Plan

You may be years from retirement, and finding a successor may be the last thing you’re thinking about, but what happens to your practice if something happens to you?

  • If you have a potential successor in mind, do an honest assessment. Does this person have the experience, qualifications, and bandwidth to take on your practice at a moment’s notice? Can you involve them more in your business now, while arranging the financial and operational support needed to succeed?
  • If selling your practice is the best option, do you have an estimate of what it’s worth? You might consider having a professional valuation done, while documenting key performance metrics such as gross operating margins and client retention rates.
  • Whatever your strategy, you’ll probably need to plan for a transition period. Some financial professionals partner with a team of colleagues to provide backup for one another in an emergency or until a buyer can be found. You may also want to prepare a letter and phone script that lets clients know of any management change, while communicating your confidence in the person you’re leaving in charge.

Involve Key Partners

Your broker-dealer or custodians can be important partners in any crisis or transition. In some cases, they can help find an interim backup or a potential buyer. They may also provide resources — such as online account access, marketing materials or turnkey managed accounts — that can ensure a seamless client experience.

As a start, touch base to find out how client accounts are handled if something should happen to you. You may also need to file paperwork in advance to designate a successor.

Addressing Other Business Risks

Contingency planning also means addressing other business risks that might impact your business:

  • Plan for working remotely. Many financial professionals have migrated to secure, cloud-based data storage and software systems so they can conduct business anytime, anywhere.
  • Safeguard important information.  Revisit your data security protocols and implement two-factor authentication to protect sensitive client data.
  • Retain key employees. Consider an incentive structure to reward staff members and review partnership and non-compete agreements to safeguard your client base.
  • Keep your best clients happy. Implement a client segmentation strategy to identify and reward your most valued clients. Satisfaction surveys are a good way to communicate your commitment to client service.
  • Protect your profitability. Review your profit and loss statements regularly and look for ways to diversify your revenue streams, including cross-selling and fee-based services (if eligible as an Investment Adviser Representative).

Revisit Your Contingency Plans Regularly

Contingency planning is an ongoing process that may grow with the needs of your business. Set a goal of revisiting your plan at least annually — updating your emergency checklists, passwords, and key financial information.

You may also need to adjust your succession plans and other policies as needed. By taking the time to do keep your contingency plan up to date, you can sleep better, knowing your clients will be cared for, and the value of your practice preserved.

The concepts in this article are intended for educational purposes only. Check with your organization for any specific policies or procedures they have related to these activities.