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Prepare for the unforeseen

Scott Stevens

Scott Stevens

January is frequently touted as a time for reflection and resolutions.

These resolves might be shifting a few pounds packed on over the festive period or setting more ambitious plans to do with your career or business.

While ambition should certainly be encouraged, financial planners with their own business should make putting a locum agreement in place (or someone who can stand in for them if something untoward should happen) their number-one priority in the new year.

Life is unpredictable, and in the blink of an eye your ability to meet the servicing requirements of your clients can change, whether due to illness, having to undergo treatment or, in the worst-case scenario, death. Failing to have someone in place that can pick up the slack could result in catastrophe for a sole trader.

In most scenarios there will be a reduction in income, as ongoing service fees cannot be charged even if services are not actually taking place. This will have a significant impact on a business’s value. 

If left unchecked, it could leave no legacy for an owner’s family or no means to support themselves.

But it is about more than just self-interest. Most financial planners have consistently put their clients first, and a locum agreement is an extension of this commitment that ensures a continuation of service.

It can also be of regulatory concern if there is no locum, because in the current regulatory environment financial advisers must deliver against client agreements and have appropriate oversight and control.

Choosing the right locum partner is extremely important. Many advisers select people like themselves, often friends with similar views, client philosophies and experience. This makes sense at one level, as experience ensures clients receive a consistent level of service if something were to happen.

However, people who are already running a business may not have bandwidth. Likewise, if they are of a similar age they might experience similar issues.

If you are part of a network, it will often be able to give guidance on good locum partners, offer templated agreements and provide access to third-party law firms.

While gym memberships may have already gone underused and dry January torpedoed at the weekend, ensuring that a credible locum agreement is in place is one resolution you really can not afford to break.

Scott Stevens is head of adviser recruitment and development for Quilter Financial Advisers