Here’s why advisors need a business continuity plan

Ask yourself this: If tragedy struck tomorrow, would your business survive without you? The answer, far too often, is no. In my experience, most advisors don’t have a business continuity plan (BCP) in place, a document that spells out exactly what happens if you can no longer run your company.

Many advisors confuse a BCP with a succession plan, but they serve different purposes — succession planning is about tomorrow, a BCP protects your business today. These plans ensure staff and clients are in good hands, regardless of what happens to you. They can also ease the burden on your loved ones, who shouldn’t be left scrambling in a moment of crisis.

According to a recent Investment Planning Counsel survey, 95% of advisors believe a BCP is just as important as a succession plan, even though very few have taken the time to create one. I often talk to advisors about succession planning, but I won’t even start the discussion until there’s a BCP in place.

Advisors put off business continuity planning for the typical reasons — they say they’re too busy or think they have all the time in the world. While the sentiment is understandable, life doesn’t work on a schedule. If you’re not careful, an illness, accident or the proverbial bus can put your entire operation at risk before your team can react.

Sadly, it doesn’t take much for everything to unravel: An advisor suffers a medical emergency, word spreads through a small community and, within hours, clients are moving their assets. Years of trust and hard work can evaporate in days if there’s no way to show clients their money is safe. This isn’t fear-mongering — it’s what happens when uncertainty fills the void.

I’ve helped build more than 250 continuity plans over the past five years and I can tell you they’re an essential part of our business. They’re also a requirement mandated by the Canadian Investment Regulatory Organization (CIRO). CIRO requires firms to have continuity plans so clients are never left stranded. If you own your advisory business, that responsibility falls to you.

A BCP isn’t about creating a thick binder no one ever reads, it’s about giving your staff and clients a roadmap when you’re no longer able to. It spells out who steps in during an emergency, what happens to your staff and how clients will be contacted and reassured during a difficult time. It includes details on where critical information is stored, how information can be accessed and what steps are needed to keep the business running without interruption.

More importantly, it gives your spouse, partner or family members a clear plan to follow if the unexpected happens. In a crisis, no one should have to figure out who to call, what to say or how the business works.

I’ve seen what happens when there’s no plan in place. An advisor passes away unexpectedly, leaving a spouse to deal with the sale of the business. Overnight, they’re forced into stressful negotiations with little leverage, watching the value of years of work slip away. A solid BCP prevents that and protects the people you care about most.

The right time is now

Start with the basics. Name someone you trust to take charge, put step-by-step instructions in writing for your team and make sure there’s a simple process to access your systems, client records and accounts. Your communication strategy is critical, too — if you don’t control the message, someone else will.

You shouldn’t wait until your business reaches a certain size or value to get this done. Whether you’re just starting out or if you’ve been doing this for decades, the right time to create a BCP is now. Depending on your age, it can also be a natural starting point for putting a thoughtful succession plan together. At the very least, it replaces guesswork with a clear path forward.

A BCP only works if it stays current. Treat it like a fire drill and review it yearly as part of your overall strategic planning. Walk your staff through the steps, make updates when your team or technology changes and confirm that everyone knows exactly what’s expected if something goes wrong. Be sure to share it with your spouse or family, so they know what to do if something happens to you.

When done right, your team will know their roles, clients will stop worrying and any ownership changes down the road will be easier to manage. Fortunately, continuity planning doesn’t have to be complicated. Don’t write a 50-page manual.

Instead, create an accessible set of instructions your team can follow. Keep a copy where it can be found quickly, back it up digitally, and make sure your key people know how to use it.

A good BCP will protect the value of your business and give peace of mind to the people who matter most. It lays the groundwork for a smoother, more thoughtful transition when the time comes.