Succession planning

Investing in succession planning

An agency’s success is wholly dependent on establishing relationships with its customers and helping them plan for the unexpected. Yet agencies are failing to do the same for themselves — 83 percent have no written succession plan in place, according to the Agency Universe Study.

Why? Agents find getting started with succession planning far too daunting.

“Would you rather write another piece of business or write a succession plan?” asked Mike Shepardson, assistant vice president of Agency Sales, Services, and Specialty. “Most agents will write the business.”

Too often, an agency owner will let unexpected or external circumstances — injury or illness for example — drive their decision-making about the future of their agency.

“Agency owners thirst for knowledge and tools to help them prepare,” says Roland Chan, founder of FindBob, a web-based insurtech startup focused on succession planning.

“But we can't put the responsibility solely on their shoulders. As an industry, we have a collective duty to help agency owners think about the future of their businesses.”

That’s why Grinnell Mutual invested in FindBob, which provides current and future agency owners with access to resources like planning documents and professionals who can help with legal and accounting.

On FindBob, an agent can create a confidential, anonymous profile. Based on the data they enter, FindBob will suggest matches to other users on the platform. Users can even contact each other on the platform using a safe and secure messaging system.

“We have so many agency owners thinking about retirement,” says Shepardson. “FindBob can help them assess the value of their business and protect the legacy they’ve worked so hard to build.”

Plan to make time to plan

Greg Jacobson, co-CEO of insurance search and staffing firm The Jacobson Group, has worked with agents and carriers on succession planning. He recommends beginning succession planning by making time to answer three questions.

“Number one, what is your end goal? Next, what is the strategy that will get you there? Finally, what happens if you get hit by a bus before number one? What’s your contingency plan?”

In this sense, succession planning is also contingency planning. Every month brings customer renewals. If an agency owner is gone for six months, half of the book of business could leak away to other agents. Even a month’s delay could mean losing significant numbers of customers.

Chan has seen up-close how poor planning can undermine an agency’s value. A close friend of his owned an insurance and financial services business. When his friend passed away, it took more than a year to transfer agency ownership to his widow and the business lost more than half of its value while it was stuck in limbo.

“If you don't plan ahead and communicate your plan, clients may decide to leave, especially if your departure catches them off guard,” said Chan.

Shepardson is a fan of planning ahead, too. “When business is humming along smoothly, there is a tendency to focus on the success and not plan for the unforeseen,” he says. “Don’t wait until it is too late.”