Preparing Your Firm for the Bad Times

Preparing Your Firm for the Bad Times

Things have been going pretty well for our industry over the last few years.

Markets are up solidly, barely disturbed by the vertigo of a few rollercoaster corrections, invariably followed by an exhilarating rise to new heights. One of these days, though, and like it or not, we know it – one of these days.

When the dolorous events inevitably hit – whether we’re caught up in global economic turmoil, a new round of war or strife or any of the usual suspects – perhaps as simple as a key executive jumping ship – we can expect to suffer. While pain is the perpetual shadow of gain, it’s good to get ready. We like to reference General Dwight D. Eisenhower, WW2 hero and later our 34th president. When battle is joined, he said, plans are useless – but the planning process becomes invaluable. Enjoy the good times, but use them to prepare for the coming struggles.

The survival of our firms is at stake. Best practice calls for developing an Advisor Preparedness Plan (APP) that assesses danger zones, identifies proactive responses and lays out how to assure our clients won’t sink. They’re counting on us and recall that if they go under, so do we.

The APP comprises four basic ideas, perceivable as foundation stones on which to build a resilient business. The first step is cognitive, calling for simple acceptance of the fact that changes will occur that can threaten our firms with extinction.

These threats won’t always be of the globe-rocking variety. They can be subtle – consider the rise of robo-advisors. This development should have been anticipated, yet many advisories were caught flatfooted and are now racing to respond.

The turmoil caused by the Corona virus outbreak is similar: we should have been ready, as the danger of a virulent new virus going global, and the potential for accompanying economic dislocation, has been discussed for years. Yet how many firms ever sat down to consider the issue?

It’s going to happen; the ostrich routine will not suffice. Scare tactics and fear-induced investment practices are hardly the order of the day. Rather, we need to sit down with our staff and develop a response.
Make hay while the sun shines: we wonder how often this old saw is mentioned in the postmodern office. We’d like to hear it. The environment is still good and we should be working harder than ever to build a productive, growing and profitable firm. Are we toiling to the limits of our abilities? Have our business processes been fully rationalized? Are we lackadaisical in finding new clientele? Review now or forever hold your peace when lightning strikes.

Leaders and key staff must clearly understand how your business ticks. Which segments are most profitable? Which areas are works in progress and how quickly can they be brought up to speed? Who are the crucial personnel, and have procedures been developed to replace them if they move on? Don’t say, well, we’ll handle it when it happens – plotting a course is tricky when the ship is violently rocking. Have a good chart in hand for setting the way.

Practices sometimes take emergency planning seriously, but fumble on the matter of communication. There’s little sense in forming a working group to formulate the APP and then toss it in the filing cabinet – likely cloud based these days. The whole team must be involved and have a chance for questions and critique. This can make the plan better and assure that everyone is ready to jump when the wave finally hits.


For more information, please read:
Does Your Practice Have a Plan for the Unexpected? | ThinkAdvisor

Working from Home Could be the Wave of the Future: Let’s Make it a Success Cavalier Associates' Operational Readiness Relative to the Coronavirus/COVID-19