At least once each year one or two of your primary carriers visit you to talk about the next year. If I’m not mistaken, a common thread includes growth plans and another asks about your succession or perpetuation plans.
The carriers are worried. They are worried that something could happen to you. Our Contingency Buy/Sell Program has become a common request from hundreds of agency owners every year.
But, while the Contingency Buy/Sell Program protects YOUR assets from deterioration or value decrease if something unforeseen happens to you, the carriers are more concerned with the protection of THEIR book of business from wholesale departure in the event of the sale of your agency if something happens to you. So, some have asked whether or not you HAVE a Succession or Perpetuation Plan while other companies request (or demand) to see your Plan to protect your agency assets from unforeseen (or planned) departure of the owners. And we have noted that many carriers are making a Succession/Perpetuation Plan a requirement for new appointments since they will spend considerable time and expense to bring new agents up to speed in the initial years of an association.
So, should you create a Succession/Perpetuation Plan because the carriers demand one? NO!!
This falls in the same category of documentation as the Strategic and Tactical Planning that we have become famous for facilitating for agencies throughout the U.S. Both Strategic Planning and Succession Planning are wonderful tools in the development and progression of agencies but both are worthless if they are created only in response to and a reaction to carrier requests.
Strategic and Tactical Planning is the working tool that tells you (and carriers if you share it with them) how you plan to develop and what you may need from them to keep you progressing toward your medium term (five year) goals and your immediate plans and needs (Tactical Plan for the next year). Instead of simply hoping for growth and retention, a Strategic and Tactical Plan actually schedules out what must be done and allows the carrier to help you succeed toward your (and their) goals.
Similarly, a Succession/Perpetuation Plan integrated into the Strategic Plan allows you to actively plan what must be done in the next year (Tactical Plan) and over the medium term (Strategic Plan) to achieve your long-term goals for the perpetuation of the agency. Including the development of internal staff, bringing new talent into the agency, and even planning for when you would like to retire and transition the agency externally, allows you and the carriers to understand why you are taking the actions that will further advance your personal plans for the future.
But the Plan (Succession or Strategic) must be YOUR plan, not caused by outside influences, to achieve YOUR goals for your business. There are many steps to take to develop, implement, and mature a Succession/Perpetuation Plan. The first of these steps is to determine if and when you would like to retire and what you would like to happen to your agency when you retire or, if something happens to you, how you would like your agency to transition if you are not able to continue to your planned transition.
We encourage you to create a Succession (internal) or Perpetuation (external) Plan that “fits” your personal goals for life after agency ownership transition. We stand ready to guide you through the process of building a Succession or Perpetuation Plan. Some agents with strong representation with a carrier might bring the carrier into the planning cycle. But the important ingredient is that the Plan is for YOUR FUTURE and should fit your needs as a business owner.