Tom Nally, president of TD Ameritrade Institutional, in his keynote address, said, “Hiring junior advisors can be great for the bottom line and the future growth of the firm.  You should have a staff that represents the diversity of your clients.”

Nally pointed out that junior advisors play a vital role, but that there are not enough young people in the industry.  To help, his organization announced the RIA Intern Network, a program designed to help attract and develop the next generation of advisors.

4. Risk Management
Les Abromovitz, attorney and senior consultant at National Compliance Services, spoke about business continuity.  Virtually all clients rely on their advisors, so it is important that proper preparations are made.

More regions find themselves at risk of a power outage, so potential problems like that should be in everyone’s plan.  Abromovitz said, “Imagine what it’s like after a disaster.”  Getting a contractor can be very expensive. 

Think of the ‘what ifs’:  What if the office is destroyed?  What if the client information is not retrievable?  What if employees cannot make it to work?  What if there is widespread devastation?  What if there is a pandemic and everyone in one office is sick?

Also ask:  Who is in charge in an emergency?  Is there a succession plan in case of a death or disability?  Are vendors prepared for a disaster?  What are the technology considerations?  Does the firm have an alternative site far away that is not on the same power grid?  Is an alternative Internet provider needed?  Do you have accurate contact info for clients, vendors and regulators?  How will clients be communicated to? 

These are all things the business continuity plan should address.

Abromovitz said the plan should also list the responsibilities of those that are testing the plan and keep records of those tests.  He mentioned regulators have given deficiency letters for those that have failed to document the test, so any time something is changed for the better, document it.  Consider doing this at least once a year.  Conduct training sessions so employees know their roles in the event of a disaster.

“When employees sign the code of ethics, perhaps have them sign the business continuity plan and note they do understand it,” recommended Abromovitz.

Business continuity is an adivosr’s fiduciary duty.  When it comes to a disaster, it is not the clients’ responsibility.  And, even if the disaster is not the fault of advisors, it is their responsibility to properly prepare for it.