Investment advisers are required to have an emergency plan. Assuming you have one, have you really looked at what it says? Have you tested it? Do you know if it will work?
As investment advisers, we are required to have an emergency plan as part of our Procedures Manual. Assuming that you have one, have you really looked at what it says? Have you tested it? Do you know if it will work?
All disasters or emergencies have a technology aspect. Obviously, power outages affect a firm's technology. Fires and natural disasters can take out equipment and more. Snowstorms or floods might directly hit the office; they can also prevent staff members and clients from getting to the office. Finally, the incapacity of a key person can leave the firm without access to his or her computer files or programs.
So, how should the average firm prepare for the unexpected?
(See also: The most critical plan you can make)
The best way is threefold:
1. Encourage the entire team to think of possible scenarios and workarounds.
2. Implement safety nets.
3. Test your plan.
Taking one of the above situations as an example, let's say there is a power outage at the office. With no computers, phone systems, lights or air conditioning, it makes no sense for anyone to go to the office. What procedures should be implemented? In my firm, we've developed the following plan:
1. CEO declares implementation of the disaster plan and determines whether employees are to report to designated contingent offices (my house, another person's home, an office suite) or work from home.
2. If CEO is not available, the responsibility goes to the client services manager, then to the senior financial adviser, etc.
3. Employees are notified, if possible, by phone, text, or e-mail using a "phone tree" structure.
4. Assuming there is accessible power somewhere, the vast majority of our programs and data are available in the cloud, so essential work still can be done. The CEO determines how and what work should be attempted.
5. Clients with meetings scheduled should be notified by any means possible. All employees have a hard copy of the disaster plan with contact information for every client, vendor and employee. Based on the situation, meetings can be held at the alternate office location, conducted remotely or rescheduled.
6. Phones will be rerouted to either VoIP or cellphones.
Several critical elements are key to the success of this plan:
• Ensuring that employees are aware of procedures.
• Having hard copy plans with contact information at each employee's home.
• Having virtual access and/or cloud IT systems.
This illustrates just one situation. Because there are so many potential disasters that can strike, it is imperative to get creative input from everyone in the firm. Then, you must take the precautionary steps. These can include having a secure place for logins and passwords, remote access to computers and software, computer back-ups, an old-fashioned non-electric phone, home or laptop computers, firewalls, paperless files, reliable vendors, etc.
Finally, you must test your plan periodically. I'm not a fan of pretending a fire has taken out the office and then alarming employees and clients. There will be circumstances when aspects of the plan will be tested naturally, such as when flooding prevents people from getting to the office. Even with that, it is important to bring up the "what ifs" to employees. In my firm, we talk about the plan and potential scenarios every three to six months. And I actually give a written test and review answers.
No matter how much we prepare, I know we won't be 100% bulletproof. At least I know we'll be OK most of the time.
Sheryl Rowling is chief executive of Total Rebalance Expert and principal at Rowling & Associates. She considers herself a non-techie user of technology.
