The Most Important Part of an Insurance Agency Perpetuation Plan

Communication group of people talking shaking hands meeting room table

Communication is the bedrock of all successful perpetuation plans.

When starting a plan for the transition of agency ownership, all partners should know each other’s individual retirement plans and how they align with the agency’s perpetuation goals.

Avoid surprises

Beginning with the end in mind, the partners can work to develop a plan that ensures an orderly and regimented transition of agency stock, books of business, leadership and relationships, while avoiding any surprise retirement announcements.

In life, things happen and situations change. Partners must keep the communication lines open by revisiting the perpetuation plan regularly and making adjustments where necessary. Meeting regularly to affirm plans — or change them to meet new realities — will ensure that everyone is on the same page.

Regular communication to future agency owners is also an essential ingredient for successful perpetuation planning.

By systematically communicating the risks, rewards and benefits of agency ownership to key employees, agency owners will begin to create a pool of viable candidates to purchase the agency.

If you fail to communicate with key stakeholders, this may cause excellent perpetuation candidates to leave the agency unaware of the potential benefits that ownership can bring.

Planning to sell? First, sell the plan

Communication is also a powerful recruiting tool. Agency owners who do a great job selling potential candidates on the perpetuation plan and the opportunity for agency ownership will get a leg up in recruiting the next generation of agency leadership.

The reality is not everyone is cut out for agency ownership. However, you can begin to plant the seeds today to grow a viable group of future agency owners and provide yourself with options. Start a conversation with key employees about the benefits and expectations of agency ownership.

Agency owners that fail to communicate effectively will find it difficult to perpetuate. To ensure long-term success, you need to develop a plan early, revisit the plan often and communicate regularly with all agency stakeholders.

Perplexed about perpetuation?

OIA helps independent agencies with full valuation services and perpetuation planning consulting. If you are considering selling your agency or transitioning ownership in the near future, reach out to our valuation team. We can help.

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