Learn how to plan your late career succession as an insurance professional with these effective strategies for a smooth transition.

In 37 years of working with some of the most successful insurance practices, the number one issue is having a system of electronic records to service clients. Without it there can be no effective succession plan. This is particularly challenging if multiple carriers and products are involved. That is why we created the Valmark policy management company.

Last updated on Jun 19, 2024

Here's how you can plan your late career succession as an insurance professional.

As an insurance professional approaching the later stages of your career, it's crucial to start thinking about succession planning. This process ensures a smooth transition of your responsibilities, clients, and knowledge to the next generation of professionals in your field. Whether you're an independent agent, a broker, or a leader within an insurance company, having a solid plan can help preserve the legacy you've built and maintain continuity for clients who rely on your expertise.

1 Identify Goals

To commence your succession planning , establish clear goals for the transition. Consider what you want to achieveâ€”whether it's a complete retirement, a gradual step back from daily responsibilities , or a shift to a consulting role . Your goals will guide the succession process and help you make decisions that align with your desired outcome. Communicate these goals with stakeholders and potential successors early on to ensure everyone is on the same page.

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Mike Clark, MBA

Financial Strategist serving business owners & families with Wealth Management âž¢ Retirement Income Planning & Asset Protection utilizing a National Digital Family Office âž¢ Offering monthly educational webinars.
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I speak to many professionals, and this is the one thing I see missing in a large percentage of them. Not only have they not identified their goals, but they typically don't know the average revenue per client. How can professionals identify their goals when they don't know what drives revenue? The other misconception is the idea of "gradually stepping back." There are two directions a business can go in - growth or slow death. There is no such thing as stepping back when most businesses are so owner-centric. Unless there are systems and processes in place that make it attractive for someone to take over, it will most likely struggle to move forward.

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2 Choose Successors

Selecting the right successor is a pivotal step in your late career succession plan. Look for individuals who not only have the requisite skills and knowledge but also share your commitment to client service and your company's values. It's beneficial to consider multiple candidates and evaluate how they fit with your vision for the future of your role. Remember, the best successor might not be the most obvious choice; sometimes, potential can outweigh experience.

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Mike Clark, MBA

Financial Strategist serving business owners & families with Wealth Management âž¢ Retirement Income Planning & Asset Protection utilizing a National Digital Family Office âž¢ Offering monthly educational webinars.
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My only advice for this one is to start years in advance. You do not start this process months or even a year in advance. Building your exit plan needs to start at least 4 to 5 years before your estimated exit. If you decide not to exit at the time, that's fine. It's better to be prepared than rush to make things happen.

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3 Knowledge Transfer

A critical aspect of succession planning is ensuring that your successor is equipped with the knowledge they need to succeed. This includes not only the technical aspects of insurance but also the relationships and nuanced understanding of your client base. Set up a structured knowledge transfer plan that might include shadowing, mentoring, and gradual handover of responsibilities. This can help minimize disruption and maintain the quality of service clients expect.

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Mike Clark, MBA

Financial Strategist serving business owners & families with Wealth Management âž¢ Retirement Income Planning & Asset Protection utilizing a National Digital Family Office âž¢ Offering monthly educational webinars.
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This is why starting this process 4 to 5 years before the project exit is critical. Mentoring key individuals takes time to determine which is the best successor. The owner also needs time to learn to let go of key decision-making. This is not an easy process, and it takes time for everyone involved.

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4 Legal Considerations

Addressing legal considerations is essential in succession planning. This involves updating contracts, reviewing agreements, and ensuring compliance with industry regulations . If you own an insurance agency, this step may include transferring ownership or restructuring the business. Seek advice from legal professionals who specialize in business and insurance law to ensure that all legal aspects of your succession are handled properly.

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5 Financial Planning

Financial planning is a cornerstone of successful succession. Assess the financial implications of your retirement or career transition for both you and your successor. This may include valuation of your business , discussion of buyout options, or adjustments to compensation structures. A financial advisor with experience in insurance can provide valuable insights into making the transition financially viable for all parties involved.

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Mike Clark, MBA

Financial Strategist serving business owners & families with Wealth Management âž¢ Retirement Income Planning & Asset Protection utilizing a National Digital Family Office âž¢ Offering monthly educational webinars.
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This "may include valuation of the business?" The business must have a valuation done. How can an employee determine if they want to be a successor if they need to know what the business is worth? How can anyone discuss a buyout option if no one knows what the business is worth? Knowing the systems and processes is part of the valuation process for any professional in the financial services business. If the business is based on the owner's participation, it may not be worth much. This data can help those key employees determine if they want to be one of them.

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6 Communicate Plans

Finally, transparent communication about your succession plans is vital. This includes discussions with your successor, colleagues, clients, and family members. Clear communication helps manage expectations and can prevent misunderstandings or conflicts. Regular updates as plans progress and evolve will keep everyone informed and engaged in the process, ensuring a smoother transition.

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Mike Clark, MBA

Financial Strategist serving business owners & families with Wealth Management âž¢ Retirement Income Planning & Asset Protection utilizing a National Digital Family Office âž¢ Offering monthly educational webinars.
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I find this one interesting. Talking about your exit will be difficult for everyone if you don't already communicate with your key stakeholders about normal business operations. If you're not already communicating with key stakeholders, it's a good sign that your business is too owner-centric. Start with normal operational conversations and work your way into discussing your exit plan. Start today!

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7 Hereâ€™s what else to consider

This is a space to share examples, stories, or insights that donâ€™t fit into any of the previous sections. What else would you like to add?

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Larry J. Rybka, JD, CFPÂ®

Chairman and CEO at Valmark Financial Group
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In 37 years of working with some of the most successful insurance practices, the number one issue is having a system of electronic records to service clients. Without it there can be no effective succession plan. This is particularly challenging if multiple carriers and products are involved. That is why we created the Valmark policy management company.

Like

Directory

Here's how you can plan your late career succession as an insurance professional.

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1 Identify Goals

2 Choose Successors

3 Knowledge Transfer

4 Legal Considerations

5 Financial Planning

6 Communicate Plans

7 Hereâ€™s what else to consider

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