5 Critical Questions Advisors Need to Answer in a Crisis

by | Jun 8, 2020 | Blog

For the past several months, COVID-19 has thrown us into a time of intense uncertainty. Like all crises, COVID-19 has called on us to adapt quickly. We closed our offices, changed how we socialize, shop for groceries, obtain medical advice, and educate our children. While we do not know what the next crisis will be, we do know there will be others in our lifetime. COVID-19 reminds us of how important it is to prepare. For financial advisors, part of this preparedness means being able to answer hard questions.

Whether the next crisis we face is global, national, local, or familial, here are five questions financial advisors should be ready to answer today.


  1. “Where are my important documents?”

Being organized, especially in a crisis is critical to saving time and being able to respond quickly.

Financial advisors who provide their clients with a digital vault where they can store and access essential legal documents bring a sense of comfort to their clients in times of crisis. Most of the well-known advisor solutions today include features for document storage and sharing. Often the dilemma is not with finding a solution, but in maximizing its usage with clients.


  1. “Am I going to be OKAY?”

Being “okay” is defined differently by different people. Some clients are “okay” if the market drops 20%; others are not. Some clients are “okay” withdrawing 3% of their portfolio each year in retirement; others want to spend more. Some clients are “okay” supporting their families with one income, and others need two incomes to maintain their lifestyle. Answering the question, “Am I going to be OKAY?” requires comprehensive financial planning.

Comprehensive financial planning evaluates all the pieces of the client’s financial situation to form one complete picture. When one part of the puzzle is missing or altered, analysis can determine the impact on the entire plan. Financial advisors that provide comprehensive financial planning can help clients answer the question, “Am I going to be OKAY?” and propose a solution when the answer is no.


  1. “Do you have a plan?”

While we cannot anticipate crises, we can better plan for them. Two basic planning tools financial advisors can use to  navigate volatile markets and unforeseen events  are an investment policy statement (IPS) and a business continuity plan (BCP).

With an IPS, the financial advisor has a clearly defined roadmap for selecting, reviewing, and replacing investments that is systematic and process based. When markets are volatile, the IPS helps the advisor make investment decisions in line with an overall strategy rather than emotions.

A BCP serves as the plan when a business cannot operate as usual.  When COVID-19 stay at-home-orders were instituted, BCPs guided independent financial advisors in setting up their remote offices. With BCPs, clients can rest assured that someone in the office remains accessible, a backup for mission-critical systems and data recovery exists, and they will have prompt access to their funds should the business have to close.


  1. “If not you, then who?”

Financial advisors are usually the ones to bring up the subject of mortality with their clients. Enter a pandemic, and death becomes a more significant concern for everyone. So, “If not you, then who?”

There are two ways to answer this question. The easiest way is to refer to a succession plan. If you have a succession plan, you have identified who is going to take your place. If the “who” is a junior advisor or partner, your client may already know your successor, which can help alleviate concerns.

If you don’t have a succession plan,  the answer lies in your contingency buyout plan (CBP). The CBP clearly defines your relationship with your broker-dealer or employer to your clients. Introducing the value of this partnership can help alleviate any concerns about what would happen to their accounts should something happen to you.


  1. “What should I do now?”

The answer to this question is simple – “Work with me.” COVID-19 has triggered a multitude of destabilizing financial events for people across the country. Millions have lost their jobs, many businesses will close permanently, consumer sentiment is down, and people are scared.   A client with any of these concerns would benefit from your guidance and expertise to help them recover and create a new normal. There is no better person to help clients during times of financial crises and concern  than their trusted financial advisor.

Answering these five questions is just the start of preparing your business to survive and thrive during a crisis. At Financial Advocates, our business development team works with each advisor to ensure their business continues to run smoothly, even when life isn’t. Contact us today to learn more about our support services and the benefits of a partnership.