Agents Share Succession Strategies

There are practitioners who advise their clients on building an appropriate succession plan, but who find developing one themselves to be “a very difficult problem,” says Guy Baker.

One area where agents have seen a problem in transferring their business is the fact that most insurance carriers will not change the agent of record for individual insurance lines, according to William Keen. “Those renewals are lost; theyre basically nontransferable. So, thats a difficult asset to sell.”

But some aspects of the business do lend themselves to succession planning, such as 401(k)s, pension plans, money management and health benefit programs. “Things where you set up ongoing programs that require maintenance,” Baker says.

The key to an agent succession plan, according to Baker, is “to capitalize your business to where it has value [which can] be transferred.”

Bakers solution to his business succession involves bringing in partners and building an organization around these ongoing entities.

“You can build a team and transfer that value effectively,” he says.

Baker has set up independent entities for each aspect of his business including money management, compensation consulting, 401(k) plans and group insurance. “And, theyre all with different partners,” he says.

For Keen, his succession plan is a “work in progress.” One of Keens sons may have an interest in getting into the business, and he expects to find this out over the next five to seven years. If his son decides to take this path, “then hell become an integral part of the succession plan,” he says. Otherwise, Keen needs to think about finding a successor. “The challenge would be to determine who has the honesty, the integrity, the personality, the expertise and the fit to be a good source for my clients,” he says.