Is your practice prepared to help your clients, or even to function, if disaster strikes?
In the wake of Hurricane Katrina, much has been written about surviving
disasters of one sort or another. Financial advisors have devoted time
and resources to helping clients affected by such cataclysmic events.
However, questions remain about how prepared a financial advisor's
practice may be in the event of a disaster.
Perhaps the first task is to determine what constitutes a disaster. For many, the disruption of normal practice operations for a period of time could be deemed a disaster. Such disruptions could include interruption of electrical power; phone lines being cut off; damage to the office structure; fire; theft; water damage; loss of computer functionality (hard drive crashes, motherboard failure, computer viruses, etc.); or any number of similar situations.
The next task might be to evaluate your practice to see to what extent you are exposed in the event of a disaster. Ask yourself and your staff the following list of eight questions (with some suggested solutions below each):
1. Is your office equipped with emergency procedures?
This would include a visual chart of emergency exits and the location of flashlights, fire extinguishers, etc.
Do you have an "emergency kit" comprising such items as batteries, flashlights, medical supplies, plastic bags?
2. Does the building your office is in have emergency electrical power
(such as a generator)? Do you have adequate battery backup systems for
all of your computers? Do you test them periodically?
Uninterruptible Power Systems (UPS battery backup systems) have come a long way in the last few years. Most of these systems are designed to keep your equipment running for at least a half hour following the loss of main electrical power. Though this may not seem like much, it can mean the difference between saving your data or losing it all. If you have a half hour, most vital files can be backed up to an emergency (removable) disk. Phone systems that rely on electrical power can be rerouted to other phone lines (or cell phones, for instance). Moreover, that half hour can buy you sufficient time to save your work, shut down your computers and remove the storage devices, if needed.
3. In light of Sarbanes-Oxley compliance, have you adequately provided for off-site storage of electronic records, backup documents from your computer, etc.?
Not only will this comply with SarbOx, it will also provide protection in the event of a disaster.
Many firms employ multiple backup locations. Using an enterprise-type computer server with multiple "mirrored" hard drives is great for firms that can afford such systems. But for smaller firms, simply using a removable hard drive and instructing the operating system to perform automatic scheduled backups to that drive may be sufficient. If you can afford it, there are security and fire-retardant systems available that are simply awesome. K.L. Security Enterprises (www.klsecurity.com) offers a disaster-proof hardware, disk backup device that includes a container that can withstand heat up to 1,700-degrees for one hour and is waterproof to 30 feet of fresh or saltwater. The company's disk backup data storage solution mimics an aircraft "black box" in durability. K.L. Security also offers water-resistant cabinets, fireproof data safes and fireproof file cabinets.
Additionally, though it can be expensive, there are Web-based storage solutions available (check out www.syncWeb.net).
If you have been reluctant to invest in a paperless office solution, this might be the time to consider it. With a laptop and a broadband card, you may be able to access client files, financial plans, investments and scores of other resources when disaster strikes.
4. If you have physical (paper) files, to what extent are they protected?
File cabinets should have individual locks. File rooms should also be lockable. Some advisors have invested in fireproof filing cabinets, as mentioned above.
5. Does your building have a sprinkler system? Smoke alarms, burglar alarms or other theft-deterrent systems?
Checking your building for fire code compliance and accessibility issues is a good idea.
6. Do you have a procedure for rerouting phone calls and/or e-mails in the event your main phone system or Internet service is down?
One of the advantages of a Voice-Over Internet Protocol (VoiP) phone system is the ease with which you can temporarily reroute calls (to a cell phone, for instance).