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Succession Planning Mistakes To Avoid

Succession Planning Mistakes To Avoid

Here are four common succession planning mistakes and how to avoid them, from Anthony J. Martins, regional vice president for Securian.

1. Not Having a Plan. According to surveys, roughly 60-65 percent of agents and advisors do not have a plan for succession. Even if you’re confident that you’ll have time to create a succession plan or think everything will just “fall into place,” the odds aren’t in your favor, Martins wrote in a guide for the National Association of Insurance and Financial Advisors.

Solution: This one is obvious, but in case you didn’t catch it — create a plan. Or at least get started with preparation and identifying potential successors, and putting ideas on paper.

2. Thinking There Is Only One Path. Many advisors mistakenly think there is only one road to retirement. In fact, there are many, Martins wrote.

Solution: Start early and be flexible. “The earlier you begin planning, the more alternatives you will have to structure your eventual transition. Remaining flexible will allow you to adapt to changes and will increase your chances of achieving your succession and retirement goals,” Martins said.

3. Limiting Your Potential Buyers. Homing in on a child or a preferred junior advisor as the one to take over the business could wind up a shortsighted decision.

Solution: Identify your value and expand the search. “As desirable as your practice may be today, you must consider how you can position it in a way that attracts successor candidates and encourages them to work with you,” Martins explained.

4. Being Informal and Not Communicating. Is your succession plan a formal document? Does the person you think is taking over the business on board? Do your clients, employees and family know the plan? The issue for many advisors is realizing the vague ideas they have about emergencies and succession are not real plans until they are formalized.

Solution: “Frequent and clear communication is perhaps the most important thing to keep in mind as you plan for your succession,” Martins wrote. Hire an attorney, and sit down with your chosen successor and nail down those details.


InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. Follow him on Twitter @INNJohnH. John may be reached at [email protected].

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