Source/Contribution by : NJ Publications
A large part of a financial advisor's life goes in convincing investors that they must plan for their goals, secure their future, that they should write a will, that they should timely plan for their estate transfer, and the like. And being a part of the industry, being so close to the harsh reality of life, you all too must have shielded yourself by investing for your goals. You want to ensure that even when you are not there, your family's goals aren't compromised, so you must have secured your family by taking an adequate term plan.
But have you ever thought about what's going to happen to your business, who is going to take care of your clients' portfolios and goals, in case of your untimely death or disablement? Remember, you have promised them and yourself that you will empower them by securing their future and will work towards timely fulfillment of their goals. If you are also amongst those advisors who have not yet thought about what will happen to your advisory business when you are not there, then you must start thinking now. The reason why you should have a continuity plan in place as soon as possible, lies in the answers to the following questions:
In event of your sudden death,
Who's going to take care of your clients' needs?
What will be the source of income for your family?
What about your employees?
Not having answers to these questions will prompt you to take the first steps in this direction.
For securing your family's income, you must realize that simply naming your nominee may not be enough. Say for instance, your wife is your nominee, now in case of your death, your AUM cannot be transferred in your wife's name until she has a valid ARN. She will only receive the trail commission till the time the AUM is not exhausted. So if your wife wants to steer your business, she must have an ARN so that she can initiate the asset transfer process. Hence, the first thing to do would be helping your nominee take and pass the AMFI exam and get an ARN, thus making him/her eligible to take over your business. Further, it is also advisable that you groom the nominee or any other family member whom you think would be suitable for running the business, with business techniques and processes, educate them about the product and the industry, familiarize him/her with your clients, thus preparing them to take the helm in case of any eventuality.
When you take a term plan, you are covering your family with a financial shield, you are assured that your loved ones will have means to survive, maintain their standard of living and meet their goals in life. The term policy imparts mental peace to you. Similar is planning for continuity of business, it's like an insurance, a policy to look after your clients and family in the worst case scenario. Many advisors, in fact have realized the importance of insuring their business' future, and have adopted unique strategies to safeguard their clients' and family's interests in their absence. Some of them have prepared their family members for the takeover, some have plans to distribute the AUM like they distribute their other assets among their kids, some of them have plans to sell the business to another advisor, or maybe partnering with someone to keep the business going even when the advisor is not there.
Also your clients may not ask you directly, but they do wonder as to what will happen to their money and financial plan after you. So, just having a continuity plan is not enough, it is essential to communicate the same to your staff, family members and clients. You may not want to get into too much of details here, yet the idea is that your people must know what to do and whom to approach when all of a sudden you stop turning up.
To conclude, your business may outlive you, and providing for it's survival will impart mental peace to you. To ensure that your clients' interests are protected, and your family's income is not disrupted, in event of a mishap, it is critical that you plan for continuity of the business immediately.
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