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The issue of succession planning

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sAn important issue the industry is facing is the aging of the producer population. Less than one quarter (24 percent) of producers are in their forties or younger, leaving the large majority of producers facing the prospect of retirement in the near or immediate future (Figure 6; click to enlarge). That means the issue of succession planning is a significant one — not only for individual producers approaching retirement but for the industry as a whole. Establishing a plan to transition a book of business to another professional represents a potential way to bring new producers into the profession. Furthermore, given producers’ professional dedication to safeguarding clients’ futures, succession planning ensures that clients will remain engaged with the planning process even after their advisor retires. Despite this, producers are generally unprepared when it comes to succession planning.

Click here for more content from LifeHealthPro’s 2013 Independent Producer Study.

Only 20 percent of producers age 50 or older have a succession plan in place (Figure 7; click to enlarge). Another 13 percent report that they are actively involved in creating a succession plan. That leaves 67 percent — two out of every three — producers over the age of 50 who do not have a succession plan established. s

Further, 29 percent of producers state that they do not plan on creating a succession plan. When asked why, the most common reason provided was that they do not plan on transitioning their book of business to another professional (Figure 8; click to enlarge). Twenty percent state that they are “far from retirement and will deal with it later.” Only 13 percent of producers state that the reason they are not planning on creating a succession plan is because they have not identified a suitable successor.


Of those producers who do not have a succession plan in place but are planning on creating one, most say they will wait until they are within five years of retirement: 34 percent state that they will create a plan when they are 5 years away from retirement; 31 percent state they will do so three years from retirement; and 20 percent state they will establish a plan when they are one year from retiring. Only 14 percent say they will establish a plan 10 years from retirement.

Most of those producers who have a plan in place plan to transition their book of business to a key employee, partner or family member (Figure 9; click to enlarge).



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