As agency owners, when we think about succession planning, we think about selling our agency. We rarely give much thought to what would happen to our agency, our team and our family if we were to get seriously injured or die unexpectedly.
I’ve seen this play out horribly because the agency owner did not have a plan in place. Do you?
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Hey everybody, Drew McLellan here from Agency Management Institute. As you can see, the city of Vancouver, British Columbia is waking up behind me. Today's topic is an uncomfortable one, but it's an important one. I've been having a lot of conversations with agency owners this week about what happens to their agency if the agency owner dies. Many of you think about succession planning, as you should, in terms of who's going to buy your agency or what happens when you want to retire? But the reality is that tomorrow is not a promise for any of us. And whether you are a 30-year-old agency owner or a 65-year-old agency owner, sometimes the unexpected happens. And whether it's a car accident or an illness or an aneurism, whatever it is, something could happen to you tomorrow. And you want to make sure that your agency and your family is prepared. In many cases, if you've done nothing, which most agency owners have, then your spouse or your significant other or your children, whether they're minors or adults, are going to inherit your agency. Not only are they going to be dealing with your death and grieving that loss, but now they've got this business entity to run. Are they equipped on their best day to do that? Are they equipped on this worst day to do that? And if not, if that's not really what should happen with your agency, if it really should be transferred to an employee or a set of employees or just shut down, if you don't have that mapped out, you're asking people who are emotionally crippled by your loss and also maybe sort of intellectually and mentally and professionally ill-equipped to deal with this to make those decisions. That's not fair. You need to take care of this. And you start by figuring out what is it that you want to have happen. So for some of you, you would just want your employees to wrap up whatever's going on in the agency and within a couple of months, shut the agency down. For others, maybe you have an adult child who's already in the business, and you would want the business passed to them because you think they are equipped to run the agency. Or you might want to have a contract that is funded by a life insurance policy with a consultant or advisor or a board of advisors to walk alongside your husband, who has not been in the business before, as he makes decisions around the business. Whatever it is you want to have happen, you've got to spell that out. And you've got to not only spell it out in your will, but you also have to make provisions for it financially, whether it's through retained earnings in the business, whether it's through a life insurance policy. But you've got to give them the tools, whoever it is you're handing the agency to. The tools to deal with your loss, with the transition, with trying to fill the spot that you serve in the agency, all of those things come at a cost. And then once you've figured out what you want to have happen, you need to sit down with people early, early on before you go to the expense of a lawyer or buying life insurance and have candid conversations about this is what I think should happen if something happens to me. What do you think? Are you willing to step into this role? Husband, wife, children, are you okay if I leave the agency to Babette, my director of account services? And there's a life insurance policy that gives you the value of the agency, so that you don't have to run the business. Whatever your solution is, you need to talk to the people involved in that solution. This is not something that someone should find out about as a surprise after something happens to you. So once you've talked to those folks, once you've got their buy-in to whatever your solution is, then you need to take care of the legal aspects of it. You need to document it in your will. You need to have maybe some agreements written and signed between some of the key players. You might have to fund it with insurance or something else. Bottom line is I don't care how healthy you are, I don't care how old you are. all of us have today, and that's a promise. But none of us know that what tomorrow's going to bring. And what you don't want to do is compound the fact that the people who love you, whether they're your team or your family, also has to worry about what happens to the agency. You owe it to them to take care of this now, to have good conversations, to have a plan in place, to have all of the tools that they need, whether it's documentation, power of attorney, money in the bank to be able to run the business for a few months if all of a sudden things dry up while the transition happens. Whatever it is, you need to take care of all of this now. Hopefully, you'll never have to use it. Hopefully, you will never need it. But don't leave the people that you care about and those employees who've been loyal to you, don't leave them in a jam where their futures are uncertain, where they are at greater risk. Give them the comfort of knowing that you have a plan, that it's all lined up, and that whatever it is that you would like to have happen in the agency after your death is all set up and ready to go. So that they can continue your agency in the way that you want, but also, so that they can be unburdened with that worry, so they can just deal with the emotional loss and then step into their new roles with confidence and with everything they need to be successful. Like I said, I hope this is one plan that you never have to put into play. But don't leave your team and your family in a lurch. Don't leave them without answers. Take care of this soon. And by the way, this is going to take you about a year to think through, to have the conversations, to get all the documentation, so don't put it off. Have this wrapped up by the end of 2019, so that everybody is taken care of, and you can cross it off your list. I'll be back next week. I promise a happier topic. Talk to you soon.
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