The ongoing coronavirus pandemic has highlighted why, now more than ever, advisors should have a true, comprehensive continuity plan that adequately prepares their firms, clients and families for the unexpected, according to Echelon Partners.
“I think this COVID pandemic has been a real wake-up call for many of us and it provides that fresh opportunity and perhaps the catalyst to help you put a proper continuity plan in place for your business, your clients, your employees and your estate,” Carolyn Armitage, a managing director at the firm, said Thursday during the webcast “Continuity Planning Solutions for Wealth Managers.”
It also presents a “tremendous opportunity for you to have another touchpoint with your clients and to let them know you’re prepared,” she told viewers.
Advisory firm owners “may not be thinking about continuity planning expressly right now” because of everything that is going on during these chaotic times, conceded Mark Bruno, another managing director at Echelon. However, the coronavirus crisis has made it abundantly clear “what some of the gaps are … in existing continuity plans.”
You Need All 3 Types of Plans for Transition and Disruption
Many advisors are overconfident about the plans they have in place, Armitage and Bruno said. Meanwhile, “one of the major stumbling blocks for advisors putting in place these plans is the confusion over them,” Armitage noted, adding: “Many folks think because they have a business continuity plan in place, they’re all set.”
However, many of them are not set because “you need all three” types of plans to deal with a disruption or transition, she said.
Those three types of plans include: Traditional business continuity planning to safeguard your clients and their accounts, and make sure they can access their funds in the event of a physical disaster or a cybersecurity breach; key executive continuity planning to determine what happens if you become disabled, sick, get hit by a bus or die, but also if you lose your license or RIA certification, or go to jail; and succession planning.
What Could Happen If You Don’t Have a Continuity Plan?
“When you don’t have a continuity plan in place … often times the flow of cash into the organization does stop right there” as soon as an unexpected event happens, Armitage said.
“Obviously not having the revenue come into the organization can have a tremendous impact — from your employees not being paid, your clients not being able to have access to the funds that they need as well as the services they need,” she noted.
“If something happens to you and you don’t have a continuity plan put in place, often times the value of the business drops by 50% for that triggering event,” she warned.
The result is “a lot of chaos,” and it “provides tremendous hardship for those that are left to pick up the pieces,” she said.
Other Benefits of a Continuity Plan
It is a huge advantage “having the peace of mind knowing that things are put in place, and it’s important to communicate to your family members, to your team” and also your clients “to let them know if something happens to me, we have a plan in place” for somebody “to take over for me,” she said.