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).

Having a smartphone that is capable of retrieving e-mails on your cell phone is a quick and easy way to keep up with your e-mail communications during a disaster. The fact is, if your phone system, broadband connection or cable modem is not functioning, cell service may still be available in certain areas. 

7. Physical office issues need to be considered. Have you given thought to how and where you will conduct business, work with staff and see clients in the event your office is inaccessible?

Many executive suite-type office operations offer cost-effective use of meeting room space. Contracting with such a location can be justified as a remote meeting location, for instance. However, in the event of a disaster, you would have temporary access to the location (presumably) for practice operations.

For example, two different companies, Premier Business Centers (www.pbcenters.com) and HQ Global Workplaces (www.hq.com), offer virtual office plans that provide mailing addresses, telephone reception services and conference room space starting at $95 per month. Depending on the location (PB Centers is mainly located in the western U.S., HQ is worldwide), you may also be able to use T1 Internet access, copier, fax and secretarial services. Furniture is provided as well. Another advantage of working with such companies is the potential use of their centers in other cities; www.executive-office-suites.us is a search service to executive office suite locations all over the U.S.

8. Have you written procedures for your employees to follow in the event of an emergency or disaster?

Some financial advisors have included these procedures in an employee manual. Items covered could include what to do in the event of a theft or fire; whom to call and how to shut down the office during an emergency or disaster; and how to transfer files, systems, phone lines, e-mail and other vital communication systems.

Periodically reviewing these procedures with your employees will keep the information fresh in everyone's mind.

If you live and work in an area with a higher risk for specific natural disasters, you may have the luxury of knowing the season for flooding, tornados, wildfires, hurricanes, severe snowstorms, mudslides, etc. However, disaster can strike in many forms. For instance, in addition to the threat of hurricanes, Florida, among other states, faces sinkholes, which could collapse a building. There is no season for that. Theft, vandalism, Internet viruses and fires generally do not have a season either. As Benjamin Franklin once said, "An ounce of prevention is worth a pound of cure." It is far cheaper to implement these eight suggestions than to pay to clean up and restore all the damage done (not to mention lost time and revenue) caused by a disaster.

David Lawrence, AIF (Accredited Investment Fiduciary), is a practice efficiency consultant and is president of David Lawrence and Associates (www.efficientpractice.com), a practice-consulting firm based in Lutz, Fla. David Lawrence is a much sought-after public speaker on a variety of leadership, financial and technical topics. For details, visit www.davidlawrencespeaks.com.