6 Steps to Business Continuity for the Independent Advisor

When you own a business, major unforeseen events and disasters can force operations to come to an abrupt halt. Cyberattacks can take a business hostage, political turmoil can disrupt economies, and catastrophic storms can flood offices and ruin equipment.

But no other event hit businesses as hard as the nationwide shutdowns due to the COVID-19 pandemic. Companies without contingency plans were left scrambling to ensure that customer service went uninterrupted. Since then, big corporations and small business owners alike have been forced to address their business continuity plans.

If you’re on your way to becoming an independent financial advisor, planning for the unexpected will be crucial to keeping your practice up and running. But, coming up with actionable protocols doesn’t have to be challenging or expensive. Here, we explain why continuity planning is critical and offer six ways to prepare your business for unprecedented events.

Why Planning Ahead Is Important

When disaster strikes, being unable to maintain business as usual can not only lead to a loss of revenue and employee mishaps, but it can also damage your reputation among clients. Insurance doesn’t cover all lost revenue or other costs, and it certainly can’t replace customers that leave you for a competitor.

The SEC and FINRA also require independent advisor firms to create and maintain written business continuity plans for emergencies or major business disruptions. Procedures that enable advisors to meet client obligations and minimize harm must be designed.

As an independent advisor, creating a holistic business continuity plan is a necessity that can help your business operate smoothly, protect data, safeguard your reputation, and ultimately help reduce long-term operating costs. Rather than struggling through day-to-day operations during an emergency, having the right plan can help you thrive.

Developing an Effective Plan for Your Business

Coming up with an effective business continuity plan requires some initial time and effort. But this upfront preparation can help you overcome challenging times without significant distress to your staff or your profits. It will also help solidify your business’s reputation as a reliable, trustworthy brand.

These six steps will help you build a detailed plan that your firm can quickly put into action.

1. Establish your emergency response and recovery planning teams.

Your crisis team should include a variety of stakeholders that can weigh in on how to handle different aspects of the business. You’ll want to have a mix of people who excel at outlining and executing procedures and those who are creative, out-of-the-box thinkers—business recovery planning will require both types of talent.

The following are examples of whom to include on your crisis team:

  • Principal advisor
  • Client service advisor
  • Technology specialist
  • Compliance specialist
  • In-house legal team or outside counsel
  • Marketing specialist
  • Facilities management
  • External business partners or essential technology vendors

You will be planning for contingencies that are difficult to foresee, and you will need insight from all directions. You want this group nimble enough to be effective, so only include those involved in operational activities that must continue without interruption during a crisis.

Next, clearly define everyone’s roles and responsibilities to avoid any confusion in the heat of the moment.

For example:

  • Ensure all members of the team have each other’s contact information.
  • Create an email distribution list or text group specifically for the task force.
  • Outline who is responsible for each component.
  • Decide on backup contacts for each role.

2. Assess your risk exposure.

To plan effectively for potential risks, consider all possibilities for what could go wrong. Have everyone on the crisis team put on a doomsday cap and assume the worst with all aspects of the business, including your physical space, computer and technical systems, financials, records, and leadership team.

While brainstorming, perform a complete SWOT analysis—strengths, weaknesses, opportunities, and threats.

Strengths: Describe what your organization is doing well.

  • What beneficial resources do you have?
  • What systems and processes are working?
  • How could you use those strengths to your advantage during a crisis?

Weaknesses: Consider the areas where your firm needs improvement.

  • Are you missing key employees?
  • Do you need better backup systems for your data?
  • Are your insurance policies outdated?
  • Does only one person have access to key systems, financials, and business documentation?

Opportunities: Review the factors that could provide your firm a competitive advantage.

  • What can you do to improve current operations?
  • How can your firm stand out and differentiate itself with its response to risks?
  • Would any opportunities arise from the weaknesses of your competitors?
  • How could you make communication better among your team or clients?

Threats: Think about the issues that could potentially harm your firm. Threats should include concerns specific to your clients, regulations, operational disruptions, physical and cyber security, and financials.

  • What could put sensitive client information or assets at risk?
  • Could an impending law or regulation disrupt your business?
  • What events could lead to the entire practice closing?
  • Is your office located in a flood-prone area?
  • Would your business be disrupted if certain software or services shut down?

3. Plan your response and create firmwide policies.

Once you complete your SWOT analysis, you can start implementing a plan. Your goal should be to eliminate any confusion that can arise in a crisis. Document the policies and procedures related to various emergencies in detail, but be sure they are easy to read and comprehend.

Regulations for business continuity plans vary depending on how your firm is registered, so you will also need to ensure that your plan complies with specific rules. Have someone from your compliance or legal team check that the elements of your continuity plan meet all of the requirements.

4. Test your plan and make adjustments.

There’s a reason why schools and organizations have fire drills—it’s one thing to have a plan, but another to actually implement it.

Run different scenarios by the crisis team, and let them walk through the steps of the process. For example, if you have a recovery site, work there for a day or two during a non-emergency to test your backup procedures and systems.

These simulations will give designated leaders, technology specialists, communications team, and everyone else a chance to practice how they will handle their roles without the pressure cooker of an actual event.

Whenever possible, make the results of your practice runs and simulated scenarios quantifiable. For instance, measure how long it took to get the backup system running and how much time your communications team needed to get an approved notification out to employees and clients.

After a simulation is complete, have an after-action report where the response team can review how things went, gauge what can be improved, and address any issues exposed.

5. Communicate the plan to your team and implement it.

Once you feel the plan is robust enough to share with a broader group, communicate it to every team member. Carefully address any questions, and be open to suggestions on how different steps can be further improved.

You’ll want to train your staff so that the required steps become second nature. But, even with training, it’s important to note that nerves will set in during a real crisis. Ensure that employees know where or who to turn to for easy access to all essential information and resources.

Don’t hesitate in rolling out your plan even if you feel it isn’t perfect. Having something in place is more important than making it foolproof, and you will have ample opportunities to revise and update it.

6. Continuously monitor, revise, and improve your plan.

Think of your continuity plan as an ongoing project that will be routinely modified and adjusted. Risks change, so your firm’s protocol will need to change, too.

Keep reviewing and testing the plan and use even minor disruptions, like work-from-home employees temporarily losing power, as opportunities to discover any modifications your plan needs.

As new procedures are implemented, keep all employees updated and in the loop.

Failing to Plan Is Planning to Fail

A sound business continuity plan is like insurance: You hope you’ll never need it, but if you do, you’ll be glad you have it in place. Taking the time to identify all of the risks to your business, and plotting out how you will respond to them, will significantly reduce the odds of a severe or potentially debilitating threat to your practice.

But, preparing for the unexpected shouldn’t be something you need to do on your own. If you’re ready to make the move to independence, look for a firm partner that understands the unique risks your practice faces and can help you plan accordingly. In addition, make sure it has its own plan in place, which should include measures to protect you, your sensitive information, and your clients’ information and assets. That way, if something unexpected happens, you’ll have the support you need to resume business as usual with little to no disruption.

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