Succession planning: Begin with the end in mind

Successful brokers apply the same mindset to the stages of their careers as they do their businesses.

Seemingly small decisions that brokers make early in their careers often influence larger decisions they will need to make later. (Illustration: Faye Rogers)

Productive companies continually evaluate strategies, make necessary adjustments and plan for the future. Successful brokers do exactly the same, managing their careers just as they would their businesses.

“They say to begin with the end in mind,” says Suzy Johnson, president and senior employee benefit specialist with Employee Benefit Advisors of the Carolinas in Charlotte. “I have always envisioned achievements and worked toward them. I have a vision of being successful in my work while helping lots of people and, at the same time, creating financial security for myself and my family. That early vision and planning allows me to be open to a multitude of options regarding the transition of the business when I am ready.”

Author Stephen Covey popularized the phrase “begin with the end in mind” in his best-selling book “The 7 Habits of Highly Successful People.” This phrase sums up how brokers should determine where they want to be professionally and personally at the end of their careers and then work proactively to reach their objectives.

Related: The 2018 Broker of the Year finalists share their keys to success

Jim King, owner and wealth manager with Balasa Dinverno Foltz LLC in Chicago, recommends this focused approach at every stage of a broker’s career. “The important thing is to have a vision and a plan,” he says. “The most successful people I know are driven by vision and goals as they progress through their careers.”

In the beginning

King provides financial planning and wealth-management services, primarily in clients’ later career stages. He understands that seemingly small decisions that brokers make early in the process often influence larger decisions they will need to make later. The most basic decision is whether to enter the profession in the first place.

“The biggest challenge for agencies is finding young talent,” King says. “In the past year, I have talked with more than 200 owners throughout the country. Their biggest challenges are growth, people and technology—and people and growth go hand in hand. A lot of opportunities are out there from a career-cycle standpoint for someone entering this space.”

He recalls a conversation at this spring’s BenefitsPRO Broker Expo. “One lady said, ‘like most of us, I never wanted to have a career in insurance but stumbled into it by accident. Not many people leave college and say, “I want to sell insurance.” It’s not the sexiest profession and often not looked upon as a great career, although it really is an awesome profession to be in.’”

The woman recalled talking with her nephew, a pre-med student and telling him, “You’re smart, hardworking and good at communicating with others. You should sell insurance.” He looked at her like she was crazy.

Because of the haphazard entries into the industry that the majority of brokers experience, many join the profession without a clear idea of how their career might unfold or the opportunities that may present themselves along the way.

Johnson’s career illustrates the many twists and turns that can happen along the path to success. She began in 1982 as a group insurance representative for John Hancock, moved to benefits consulting and then sold self-funded third-party administrator services. She later started an employee benefits brokerage for a life insurance company, which she eventually purchased and grew into her current company.

“In 2007, the business had 320 commission groups with an average size of 20 employees,” Johnson says. “Today, we have 160 clients averaging 40 employees, with 80 percent of our revenue coming from fees. Last year, our agency brought in several new clients with more than 300 employees, and we are focused on companies with 100 employees or more.”

She encourages newer brokers to never stop learning, become involved in industry associations and seek out mentors. “I have been deeply involved in NAHU and the International Society of Certified Employee Benefit Specialists my entire career,” Johnson says. “Education and designations are meaningful to me, because they show a commitment to getting better.”

Follow the leaders

Susan Rider with Gregory & Appel in Indianapolis credits several mentors for pointing her career in the right direction. She started as an account manager 14 years ago and is now a consultant on employee benefits and human capital management.

“Tom Harte was my formal mentor though the NAHU program,” she says. “A few years back, I was the chairwoman of the NAHU task force now known as Vanguard. During my years on that committee, we created a formal mentoring program for new and young agents. Mentoring is a passion of mine, probably because of the impact my mentors in the industry have had on my career path.”

Employers can also play a key role in developing young brokers, King says. “Early in your career, find an employer that focuses on developing talent and investing in its people. Instead of wanting you to go out and sell right away, they should focus on helping you learn your craft. Agencies that are successful and grow their organization focus on basic education and developing their talent pool.”

Rider has a few pieces of advice for anyone entering the profession:

Employers and employees also need to remember that the happiest and most successful brokers over the long haul are those who maintain a healthy work-life balance. “Focus and work hard, but remember to take time off and seize opportunities as they arise,” Johnson says. “For instance, if there is something you have the opportunity to do, such as an adventurous trip somewhere, plan for it, commit and do it. When you view your work as part of your life’s purpose, there is always time for trips and relaxation created by the hard work you’ve done.”

Stuck in the middle

The critical decisions to be made early and late in a career are usually easy to recognize. It’s the middle years, those that account for the majority of work life, where it can be easy to become focused on day-to-day activities and lose sight of the bigger picture.

“Mid-career is when complacency can set in,” King says. “When you have grown your book, you almost feel stuck in the same position. The longer you are there and the larger your book, the harder it can be to move and be confident your clients will go with you. It may be time to evaluate your skill set and look at the peers in your organization.”

High-performance brokers may face the tough decision of whether to remain in a comfortable position, jump to a new company that may offer greater opportunities (and possibly risks), or even to start their own agency. Johnson wrestled with these issues in her own career. “In the early years, the business was very lucrative and grew only in a positive trajectory,” she says. “However, over the past seven years, there has been much more volatility in earnings and creating growth, so I have had to become much more focused on this.”

Throughout the process, she has had to weigh tempting offers to purchase the business against her own passion. “I am entrepreneurial and know the reason I bought the company was to remain independent, nimble and in charge of my own destiny,” she says. “I would not do well for any long period of time working for somebody else.”

When a business or career is running smoothly, it’s easy to assume that outside advice is no longer as important. However, this may be exactly the time to seek wise counsel.

“Because I have been approached to sell the business on numerous occasions, I thought it would be good to hire an outside consultant to help us write a business plan for transition in the future,” Johnson says. “This was a very positive experience, because it prompted conversations internally with associates about what they want for their future in view of my own goals.”

The end is near

Succession planning is one of the biggest challenges that owners face, both professionally and personally. “Putting in place a succession plan is paramount to building a high-functioning, cohesive team,” says Michael Futterman, director of Janus Henderson Labs.

As much as brokers may look forward to selling their business and retiring, winding down a career is seldom simple. In a recent survey, the Financial Planning Association in Denver identified three potential stumbling blocks that often arise for owners during succession planning:

“You can’t wait until you are 63 if you want to retire at age 65,” King says. “You need to start at least 10 years earlier. Even in your 40s, you want to have a vision of what the end will look like. If you plan to sell your business 10 years from now, what has to happen for you to feel successful and fulfilled in your life?”

To help his clients get started, King challenges them with these questions:

Johnson has given these questions a great deal of thought. “I anticipate working another five to six years,” she says. “I don’t know exactly when and how our transition will occur; however, I have a good idea of what is possible and what EBITDA can be expected, as well as metrics we need to reach to assure a smooth and fruitful transition for all on our team for the future.”

It’s easy to focus solely on the bottom line when making a decision, but King points to three often-overlooked factors when selling an agency:

“Work is much more rewarding if you can share successes with others and find motivation among others,” Johnson says. “I have brought in two very competent professionals, Rachel Miner and Chris Ross, and both will receive 10 percent of the business upon reaching a common goal that we all believe is very achievable. Plus, I have a very committed, smart, hard-working director of operations, Jennifer Weston, who will share in some equity when the goal is attained. My hope is that my vision, drive and business sense will help them in a way my mentors and business coaches have helped me.”

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