5 Key Steps for Succession Planning

Many owners focus on the financial aspects of succession, but it's also crucial to take a disciplined approach to the human component.

Succession planning has two key components: the financial component and the human capital component. They are both critical. Many financial services professionals spend a career selling solutions for the financial component, but this means very little if the right people are not in place to step forward and assume responsibility for the future. My experience, working with companies on their human capital needs, is that producers, managers, general agents and brokerage general agents (life/ annuities, group insurance, money management, etc.) have the same challenge that all businesses face. In any business, succession is one of the most critical elements in attracting good people to maintain, grow and build on the foundation for the future.

If you are looking for a way to have a smooth transition with maximum benefit to all stakeholders, retain clients and key employees, you must take five key steps:

1. Identify the end goal.

2. Determine the kind of person needed for a successful succession.

3. Have a well-thought-out process for identifying the successor.

4. Set target dates, milestones and trigger points.

5. Put everything in writing.


Do you know what you want to happen with your business when you exit? The goal might be as easy as selling to a peer, key employee or family member. But it might involve a lot more work and thought if you decide to split the business up into smaller pieces to sell it off or to look outside your current firm to find a successor. In many cases, executing your end goal and letting go isn't easy and requires doing a great deal of planning, asking tough questions and setting expectations for everyone involved.


What type of individual should be stepping in to take over? Look at experience, background, character, shared vision and willingness to follow through on promises made. Once you have these basic skills/traits identified, you need to define what will be expected on a daily, weekly and monthly basis. Some of the questions you need to answer include:

  • What are the key performance expectations, both short-term and long-term, for the individual filling this role?
  • How will you define and measure successful performance in this role?
  • How will he know whether or not he is properly performing the critical functions in meeting the organization's expectations?

Once you have answered these questions you can move on to the next step.


Once you have identified the role requirements for a candidate, the search can begin. If you have internal candidates who might fit the description, now is the time to approach them regarding the role and your long-term plans. If you don't have any internal candidates, you need to go out to the marketplace yourself or hire someone to make appropriate introductions for you. You will need market research on the number of available candidates and the cost to attract them.

An outside consultant who knows your niche is your best source for obtaining the market research you need and for qualifying potential candidates. Even large companies that have human resources and strategic planning departments will find that an outside consultant can provide great help with an impartial viewpoint - and usually at a lower real net cost. You will also find that they can help you avoid some of the internal political battles that exist in larger companies.

Once you have a complete list of candidates, you can begin your evaluation of their background and desires to see if they align with what you are looking to accomplish and the legacy you wish to leave.


No one likes uncertainty. Employees, clients, carrier partners and potential succession candidates all need to know what to expect and when to expect it. Owners often believe that an incoming owner will work harder if she is "hungry," but if she doesn't know what is expected of her, how will she know when your goal has been reached?

Both you and your successor need to agree on and accomplish specific goals. For example, if it's a general agent (GA) succession plan and the target is 15 new recruits each year, attach a number to both the incoming GA and outgoing GA. If the incoming GA doesn't hit the mark agreed to at each milestone, she doesn't get the additional stock in the organization. If the outgoing GA doesn't hit the milestones he agreed to, he doesn't get as rich a payout (this way they are both tied to the other's success). You can create this same kind of agreement in all sectors of the business and at all levels of an organization (president, manager and producer). You also need to set dates to sit down and review progress and successes (and potentially have a third party involved). This will help everyone focus on what's important and work together.


I've often talked with an organization halfway through a succession plan, and I hear different stories from the partners, employees and carrier partners. Making sure the carriers and existing partners are all in agreement with the plan is essential to your success. No one wants to feel taken advantage of, and having a clear plan laid out in writing will keep everyone on the same page and pulling for each other. Have a written business plan with all timelines and expectations (without financial numbers) to share with clients, company partners, employees and prospective employees. Not only can this be an effective recruiting, business development and retention tool, but communicating that you have a well-thought-out succession plan can be critical to existing and potential new customers. As the saying goes, "The business that stays, pays."

This is certainly not a complete list of everything that is involved in succession planning, but these are the five foundational elements that should keep your quest for the right successor on track.

Kevin Dougherty

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Kevin Dougherty

Kevin Dougherty is the founder and president of GCL Group. Located in the Indianapolis area, GCL Group is one of the nation's premier consultants in executive search for the insurance industry, recruiting field executives and home office executives for positions across the U.S. and Canada.

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