In the same manner in which you advise your clients on the steps they need to take to ensure their financial affairs will be managed in case of an unforeseen event, so should you with your business.

There is a lot at stake for you, your family, your employees and your clients so a thorough approach to protecting your practice is warranted.

The key areas to consider include:

• Death, Disability
  
• Disaster Recovery
  
• Non-solicit agreements
  
• Errors and Omissions insurance
  

Death, disability

If you are a sole practioner or owner of your firm, creating a contingency plan in case of your death or disability can be challenging.

Additionally, if you have not identified someone in your business, family or another advisor to take over the practice in case of an unforeseen accident or event, then there are additional legal, regulatory and other issues that may prevent you or your family from realizing the benefits of your life’s work in building your firm.

To help support you in this area, Raymond James has created a Succession Resource to help you find someone you can include in your contingency plans to ensure a smooth transition.

Disaster Recovery

A new focus area for regulators in the wake of 9/11 and recent natural disasters is for advisors to have disaster recovery plans.

These plans include having written policies and procedures for the orderly transition of firm management in case of incapacitation of the owner/manager. Additionally, written procedures for backing up client information and firm records are required.

To ensure that you are adequately in compliance with these requirements, consult with your Compliance or Legal professional.

Non-solicit agreements

One very often overlooked area by advisors is failing to have key employees sign non-solicitation agreements. Without such an agreement in place, there is nothing legally stopping your employees from actively soliciting your clients and taking them with them if they leave the firm.

In order to protect your business from this eventuality, consider having every key employee who provides advice to your clients sign such an agreement upon first entering your practice.

There are various legal issues involved in these types of agreements, so consult with your legal professional.

Errors and Omissions insurance

As the investment advisory business becomes increasingly complex, having adequate insurance to protect your business from claims arising out of your practice of giving investment and financial advice is becoming even more critical.

While many firms choose to go “bare” and not obtain e and o insurance, all it takes is for one claim with the associated legal costs involved to put serious strains on the cash flow of the business.

As part of your approach to protecting your practice, obtaining adequate levels of e and o insurance is a wise and practical thing to do.