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What would happen if you got hit by a bus tomorrow?
A little morbid, we know.
But seriously, what would happen? Who would your clients turn to? What would become of your business?
These are questions that all business owners should ask themselves, but they are especially important for independent financial planning firm owners. Something could happen at any time that might prevent you from working, whether it be an illness, accident or a family emergency. That's not to say that you should run your firm on pins and needles expecting disaster around every corner, but rather to emphasize the importance of having a continuity plan in place.
For female advisors, continuity planning is essential to protect both the business and the clients. By putting a plan in place, firm owners can ensure that their business will continue to run smoothly in the event of an unforeseen circumstance, such as the death or disability of the owner. This planning helps safeguard client assets and information, providing peace of mind in knowing that their finances are being taken care of. By taking the time to plan, you will ensure that your business and clients are protected in the event of a setback.
Here are five steps female financial advisors should take when putting a continuity plan in place for their firm.
1. Determine the most important qualities you are looking for in a business partner. These could include location, fee schedule, investment philosophy, or niche. Once you have a clear idea of what you are looking for, you can start to narrow down your options and find the best partner for your business.
2. Once you’ve determined what you’re looking for, find that person. Ideally, you'll want someone who shares your values and vision for the company, so if you're a part of a financial network, you have a great resource to tap into. Selecting someone from an existing network will also increase the likelihood of a smooth transition if/when the time comes, as your partner will already be somewhat familiar with your business.
3. Next, bring in some external resources to help with the actual continuity planning. This could include an advisor planning expert, an attorney, and an insurance broker. These professionals can provide valuable insight and knowledge that will be helpful in ensuring your continuity plan is thorough and complete. Additionally, they can help to identify any potential loopholes or areas of concern that you may not have considered.
4. Have your firm valued. You need to know what it's worth now and what it might be worth in the future so that you can determine how much to insure. There are a few different ways to value a firm, but one of the most common is to use a multiple of revenue or earnings. This method considers things like the company's growth rate, profitability, and risk. Once you've determined the value of your firm, you can then start to shop around for continuity insurance.
5. The final step you should take is to bring your estate planner into the conversation. How you structure any transfer for your firm will affect how any value from the firm transfers to your family. Estate planning is a complex process, and there are a variety of factors that need to be considered to ensure that your family is taken care of in the event of your death or incapacitation. By working with a qualified estate planner, you can ensure that your continuity plan takes all these factors into account and provides for your family in the best way possible.
Bonus tip: Check in with your emotions. While this checklist might seem straightforward, we understand that continuity planning is not black and white, and it can be a very emotional experience. No one wants to be thinking about a “hit by a bus” situation for their business or for themselves. But just as we plan for our clients, we have a responsibility to include continuity planning as a part of our overall business planning.
Bridget Grimes and Katie Burke co-founded Equita Financial Network out of a need to fuel business success while empowering other women in the financial services industry. Equita became the first platform solely focused on women-led financial planning firms, designed to encourage women to make the leap into launching their own practice and provide solutions to support them every step of the way. Equita is a way for like-minded women to not only share resources and run their business at an affordable cost, but to also share ideas on everything from best practices to help with questions regarding client issues.
There is a lot we can learn from ourselves and others when it comes to best practices in our businesses, continuity planning included. If you have any questions, please contact Equita Financial Network. We would be happy to share how joining a financial network can help to ease the fear around this important aspect of your business.
