The ongoing coronavirus crisis 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.
“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 during the early-April webcast “Continuity Planning Solutions for Wealth Managers.”
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.”
Three Plan Types
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 even die, but also if you lose your license or RIA certification, or go to jail; and succession planning “to let them know if something happens to [you, the firm has] a plan in place” for somebody “to take over for you,” Armitage said.
“When we see organizations that have a defined and documented continuity plan, that’s usually a telltale sign of a very well-run business,” Armitage explained. Also, “when it comes time to sell that business, the buyers really appreciate” it too.