It's an ordinary morning and you're on your way to work when the drive-time shock jock is abruptly interrupted by a news bulletin: A commuter train pulling into Penn Station in New York has been blown up. Twelve hundred people are dead and hundreds more injured.
Just writing this paragraph upset my stomach, but we all need to envision the ugly reality that could befall us should another terrorist attack occur. Thinking about this is difficult, and you cannot help but feel cold-hearted to calculate such risk and think about how it will affect your business. But to not do so is irresponsible.
Our nation is fighting terrorism and we pray for success, but the sad truth is that we remain vulnerable. So prudence mandates that financial advisors plan for disaster. The disaster recovery plan the Securities & Exchange Commission expects RIAs to have is one type of fire drill that you can run. This means ensuring that you have backup copies of data, your vendors have their own backups, and that your business can survive an attack that hits your town or companies you rely upon.
But another aspect of this fire drill is figuring out now what you will tell your clients in the event of another major terrorist attack.
Do you have a letter drafted that you can adapt and send to clients reassuring them? Have you discussed with your employees what their jobs will be in the event of a disaster? Have you thought about talking with your clients now--before anything bad has happened--to tell them what you think you will do to manage their money in the event of another terrorist attack?
Communicating with clients now about your plans in the event of such a disaster will go a long way to limit panic if something does occur. It almost does not matter what you tell people. Your strategy could be to buy oil stocks, sell U.S. Government bonds, aggressively buy French stocks, or go heavily into the S&P 500. Telling clients now that you have a plan-that you have thought about the unthinkable-will help keep them confident and prevent emotional decisions based on short-term events. So make a plan, tell clients about it now, and then hope you never have to use it.