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What to Know Before You Bring in the Next Generation

We are aware of the business continuation crisis in our industry. We have heard that the average age of an insurance agent is somewhere in the mid-50s, and we have seen the sale of insurance agencies to aggregators because of a lack of business continuation options. 

Yet some boutique and family agencies are surviving and thriving. After working in such an agency for 10 years, I would like to share how a first-generation owner — a GI owner — can successfully add a second generation — a G2 — to their agency. And, if this is done the right way, that G2 can become a G2 owner.


Make Sure You Have a Legitimate G2

As a G1 owner, understand that despite your best efforts, your son or daughter might not be interested in joining your business. Any G2’s curiosity will be piqued by your continued success. They will be attracted to your business mainly because of its perks — such as the ability to set one’s schedule, the earning potential, the reward for hard work, etc.

But this does not mean they are necessarily a good fit for your agency. Too often, I have seen G1s who are so eager to bring in their G2 family member that they make major hiring and management mistakes. To avoid this, make sure you have ongoing discussions with your G2 about the business before they commit to joining your firm.


Define Expectations

Before bringing on a G2, have early discussions with them on various topics, including:

  • The G1’s expectations and requirements for the job.
  • What it takes to be successful, in a G1’s mind.
  • The G2’s expectations and requirements for the job.
  • The G2’s definition of success.
  • The G2’s passion. Ask them why they want the job.
  • The G2’s long-term vision. Ask them where they want to be in three, five and 10 years.
  • What support does the G2 expect, need and want?
  • What can a G1 realistically offer the G2 to help them grow and achieve their goals?
  • What is the value of the agency when the G2 enters the business?
  • How does the G2 feel successful or appreciated?


Because you are family, you often think you know and understand the answers to these questions. But for both the G1 and the G2, it is important to address these questions and carefully articulate the answers.


Put Something in Writing

Having a written plan is key. Every successful team has a game plan. While all of us understand that you have to “earn it” in this business, I am not advocating that you sign away your agency on the G2’s first day on the job. Instead, have metrics in place — quantifiable measures that the G2 can use to assess their progress. 

For example, there is nothing wrong with your saying to the G2:  “At the end of X number of years, we are going to see where you are, and if you are able to hit Y amount of production, you can be eligible for certain things, such as equity, bonuses, executive benefits and education support.”  You are not signing away the company — you merely are making sure that all parties are clear about goals and expectations.


Realize the Workforce Is Changing

Our workforce is constantly changing. It is important for the G1 to realize that today most households have two working parents, numerous child activities and many parental responsibilities. Employees with advanced degrees are joining our industry and are looking for employers who not only care about them, but also can help them develop professionally. As a G1 and an employer, it is your responsibility to understand what motivates your employees, and these include your G2. Understand what is important to them and support them in the best way you can.

When bringing a relative to work for you, remember to treat that individual like any other employee. If you rave about their work, be sure to rave about the other employees’ good work as well. And while you’re at work, be sure to address all employees in the same way.

Finally, have a compensation plan that ensures that employees with the same job description and duties are paid equitably — not necessarily the same amount, but by the same standard.


Danny O’Connell is CEO of Next Level Insurance Agency, a Dallas-based agency specializing in employee benefits, executive benefits and retirement. Danny may be contacted at [email protected].

Danny O’Connell is CEO of Next Level Insurance Agency, a Dallas-based agency specializing in employee benefits, executive benefits and retirement. Danny may be contacted at [email protected] danny.o'[email protected].

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