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(Related: What Makes a Hero?)

All broker-dealers are thinking about which employees might be able to work from home, as suggested by the Financial Industry Regulatory Authority.

Even with increased telework, brokers and dealers need to be informed and proactive to work with clients, market needs and regulators as more information continues to be released and reported.

What exactly should broker-dealers be prepared for?

  • Pandemic-related continuity planning needs.
  • The flexibility of existing business continuity plans.
  • How current pandemic concerns and issues may affect existing or future needs of business continuity plans.

FINRA provided these advisory’s in relation to member firms to ensure their continuing ability to meet their existing obligations to customers and relationships to other broker-dealers.

They are advised to conduct their own risk analysis to determine where critical impact points and exposures exist within the firm and their counterparts.

As I read these recent advisories to brokers-dealers, I wondered about their small and midsize business clients.

Don’t these same concerns broker-dealers have been advised about by FINRA — ensuring they are able to meet existing obligations to customers — apply to the owners of the broker-dealers’ small-business clients in relation to their families, key employees and customers?

These small businesses have three basic options when an untimely or unexpected illness or death occurs (or a pandemic-related event that disrupts the very fabric of their business):

  1. Keep it.
  2. Sell it.
  3. Liquidate it.

This article isn’t a “Planning Business Continuity” primer, it’s a question.

In today’s economy, for example, the impact of the loss, short-term or permanent, of a key employee is becoming a critical question.

The very same questions and advisory FINRA is giving broker-dealers are the things broker-dealers should and must take to their existing clients and the marketplace.

Many business owners define “key” people based on:

  • High salary: High value put on these employees.
  • Decision-making power: They control business direction.
  • Frequent direct client contact: The relationships that business success depends on.
  • Crucial position: Product development, production, technology or sales.
  • Special talents: Difficult people to replace.

In most small business, the owner is involved in day-to-day operations and may be the most important employee of all.

What would be the economic impact if this key employee were quarantined, sidelined, even for a short time?

Issues like these are just as important to them as to broker-dealers:

  • Key man insurance.
  • Disability plans.
  • Buy-sell agreements.

Don’t these small businesses need to be informed and proactively advised on ways to work with their clients, employees and related businesses to protect against the risk of a pandemic occurrence and its possible impact on their business?

Of course, they need to be prepared for issues like:

  • Pandemic-related continuity planning.
  • The flexibility of existing business continuity plans as they relate or could relate to the managing of the business.
  • Possible effects of current or future pandemic concerns and issues that could affect existing or future needs.

It’s important, timely and required that FINRA inform, advise and require proper oversight of these issues within the broker-dealer market.

The industry depends on them to provide clarity, certainty and confidence in the broker-dealer operating models, consistent with their clients’ needs and rights.

I submit that this holds true for broker-dealers’ clients, that they go forth in the market and ask these same questions to bring clarity, certainty and confidence to their clients.

Broker-dealers should conduct these same reviews and advise the appropriate solutions, whether it be wills, trust, buy-sell agreements, life insurance, critical illness, disability, annuities, whatever underlying vehicle or instrument that will provide the small business the same certainty and resources to protect their employees, customers and family.

Now is the time for your CTA – Call To Action!

— Read Retirement Planning Made Simpleon ThinkAdvisor.


Lloyd Lofton (Photo: Lofton)
Lloyd  Lofton   is the founder of   Power  Behind the Sales and the author of The Saleshero’s Guide To Handling Objections.