People, Profit, and Process: Confronting Agency Succession Planning

People, Profit, and Process: Confronting Agency Succession Planning

Agency succession is coming. You have two choices: make it happen or let it happen to you.

As an independent agency owner, you know the first option is the best. Taking control of your succession planning means you’re ready when the time comes. To prepare, you need to do things like choose a successor, determine your agency’s worth and have the right insurance agency support procedures in place. In short, you need to think about three areas: People, Profit, and Process.


Who’s Taking Over?: Handing Off Your Independent Insurance Agency

Who’s Taking Over?: Handing Off Your Independent Insurance Agency

When it comes to agency perpetuation planning, you’re likely somewhere between square one and planning your retirement party. Let’s hope, unlike some of 2016 Future One Agency Universe Study respondents, you’re closer to a beach house and a cold drink. The study found 23% of agencies with one principal over age 66 said perpetuation was more than five years out. Age may bring wisdom, but it should also bring retirement before 70!

Who is Taking Over Your Insurance Agency?

Who is Taking Over Your Insurance Agency?

Are you looking for the secret to a successful agency perpetuation? We’ve got it in three simple steps:

  1. Plan ahead
  2. Plan ahead
  3. Did we say plan ahead? As in…NOW!

Whether you’re handing off or taking over an insurance agency, it’s never too soon to start thinking about and planning the transition. A large part of that planning is deciding who will be taking over.

Many decide to perpetuate internally, thinking it’ll be easiest to pass on operations to a family member or long-time employee. But, as any owner knows, running an agency requires more than logging hours. It’s what you do with those hours that counts. Here are three real steps you can take towards a successful transition with your successor.

Is internal perpetuation right for you? Read our post on internal vs. external perpetuation to find out

1) Find the Right Person

Don’t get us wrong, long-term investment in the agency is a good indicator for a potential successor. A good successor knows your agency and its culture. Though they won’t run it the same as you, knowing the history and the spirit of the business is huge.

You’ll also want someone who is up to the challenge. Taking on an agency is a big undertaking. Look for someone who deals well with uncertainty and thrives on possibility.

Finally, leadership is essential. A great successor will be able to bring the team together and clearly communicate mission, vision, and goals. They’ll be able to motivate employees to take on the transition ahead, celebrating successes and keeping the team positive through challenges.

Are you asking these five questions as you prepare for perpetuation?

2) Get Them Involved

Once you know who will be walking the transition journey with you, get them involved in the process. Include them in strategic agency planning and get their input. The more your successor knows the better. Give them insight into why things are done a certain way, how decisions get evaluated, and their implication on the agency. Sharing these elements with your successor helps them build a broader perspective for when they take over the agency.

You should also include your successor in all perpetuation planning (you’re starting now, right?!) going forward. Again, the more they know, the smoother it’ll be to hand things over. Part of this planning includes being clear on how you want to be involved post-transition.

Read the dos and don’ts of taking on the family business

Lastly, be intentional about bringing your successor into the key relationships involved in your agency. As an owner, you’re well aware the important role each of these relationships play. Introduce your successor to industry group members, board members, carrier contacts, and your agency management system contacts among other key players.

3) Lean on Your Management System

One of the most challenging pieces of your #agency #transition is exchanging information and knowledge. Your agency management system is an asset here. Be intentional about using it to store data and create a comprehensive picture of where your agency stands. Work with your successor to create and understand financial and other reports and map out best practices for use.

Find out more on how to leverage your agency management system

It’s helpful to get a re-training from your agency management system provider. Use these sessions to introduce your successor to the ways an owner can maximize system use and get your employees on the same page about workflows and best practices.

The dedicated service team at SIS has been part of numerous agency transitions, walking with owners as they navigate the seemingly murky waters. Our team has been praised many times over for their aid during transition, and our PartnerNet portal acts as a 24/7 resource for our partner agencies.

If you’re thinking about making a change in your agency, get in touch with us. Contact the SIS team at to get connected today.

5 Questions to Ask When Preparing for Perpetuation

5 Questions to Ask When Preparing for Perpetuation

Planning your insurance agency perpetuation may seem like an insurmountable task. But, when broken down into manageable pieces, it can be tackled like any major project. Throughout the years, we’ve created a number of resources to help owners map out their succession plan. When compiled, we found five simple questions can put agency transition on the road to success.

  1. Do I perpetuate internally or externally?

There’s a reason this is question number one. Your answer will determine what path you’ll take and how to prepare your agency for it. Weigh what you’re looking for in succession. Internal perpetuation usually means more brand consistency and control, but external generally means a higher cash gain.

  1. Who will take over?

Once you know if you’re looking inside or outside of your agency, think about who will be taking the reigns. If internally, it may be a family member or employee. If external, it could be a local agency, larger regional agency, or even a bank. Decide what’s best for your business. Ideally, you should start planning your perpetuation 5-10 years out so you have time to work with your successor on the next three questions.

Read more on the pros and cons of perpetuating internally and externally

  1. What’s my agency worth?

Determining agency value can be tricky. To help, ensure you have a financial reporting system in place early on. Most agencies use their management system to track money in and out. Use reporting features to set up recurring reports to give you a clear picture of where you stand year to year. This data will inform you on your agency’s real value. That’s a great bargaining chip when negotiating with potentials buyers.

  1. What’s my timeline?

If you’re asking when you should start planning, the answer is now. As mentioned, the nuts and bolts of perpetuation should be put into motion 5-10 years out, but it’s never too soon to draft a timeline. In your timeline, map out when you plan to select a successor, length of the transition period, and your expected turnover month and year. Knowing these dates ahead will help you prepare your staff, your successor, and yourself for the transition.

  1. What’s my post-succession role?

Everyone is different when it comes to how much they’d like to be involved post-transition. You can stay on with a more active role as an advisor or board member, or you can choose to take a more passive position jumping in here and there as needed. If full retirement is more up your alley, you can pass off your agency and hit the links. Just be sure you’re upfront with your successor on how you’d like to be involved.

Here’s what to do – and not to do – when planning succession

BONUS: What will be my biggest obstacle?

There’s a lot that goes into planning and executing your agency transition. What are you most anxious about? Whatever it may be, that’s the area where you need to spend the most time. Reach out to owners in your local professional organizations, do your research, and make sure you’re as prepared as you can be for whatever scares you most.

Find out what other agencies had to say about perpetuation in our Perpetuation Survey

For many, it’s the transition itself that is most intimidating. You can ease that fear by ensuring you have the right technology to easily transfer information. As we’ve heard from our partner agents, being able to turn over critical data with our Partner XE agency management system has been a lifesaver. With integrated accounting and email systems and an intuitive, easy to use interface, Partner XE leaves you one less thing to worry about in agency perpetuation.

To find out more about Partner XE, get in touch with an SIS team member today at

Internal and External Agency Perpetuation: How to Choose

Internal and External Agency Perpetuation: How to Choose

You remember the days of you, a phone, and a desktop in a tiny office. The long days of calling carriers and hearing “no” after “no.” Waking up early and going to bed late, building a business based on hard work, professionalism, and care. And now it’s time to step away. Years of hard work and a lifetime of memories are invested in your agency. How do you pass it on?

Making Your Insurance Agency Perpetuation Choice

Agency succession can essentially take one of two paths: internal or external perpetuation. Internally, you can pass on ownership to key employees, friends or family members through sale or inheritance. Externally, you can sell to another agency or merge with another firm.

Discover the “who” and “what” to include in your perpetuation planning

As often happens with such important decisions, both methods have their benefits and drawbacks. Let’s explore the positives and negatives of each.

Internal Agency Perpetuation

Internal perpetuation means “keeping it in the family,” whether that is your blood relatives, friends, or trusted employees. Passing on your agency to someone you know has its benefits such as:

  • Provides cultural continuity
  • Allows owner to stay involved
  • Ensures experienced, trusted party is taking over
  • Gives customers and carriers a familiar face

Yet, there is a risk involved when passing on your agency to someone internally. Stats show that less than 40% of family businesses survive to the next generation and even less to the third. Most internal perpetuation fails due to finances. In many instances, the buyer cannot afford the buy-out, and you end up losing cash in the long run. You can avoid these financial issues by:

  • Establishing deferred compensation for you, the owner, or producers
  • Offering stock redemption as a form of deferred payment, or
  • Gifting the agency, requiring no payment

External Agency Perpetuation

Perpetuating externally means selecting an outside party to take over your agency. This could be another independent agency or a larger firm, but either way, it means you’re giving over control to someone who has no incentive to keep you involved. The benefits to external perpetuation include:

  • Larger cash benefits
  • Separation from involvement
  • Potential for more robust infrastructure

Still need more information? Access our full list of perpetuation resources here

However, external perpetuation also has its drawbacks. Selling to an outside party can cause stress for employees and a potential loss of company culture. Similarly, the transition may be difficult for customers. To combat this, you can stipulate certain employees stay on in influential positions or outline a “gradual release” of ownership. But, such conditions may negatively affect sales price.

The Bottom Line: Protecting Your Agency’s Value

No matter which way you go, it’s important to think about the value of your agency before making a decision. Whether it’s stock options or your book of business, buyers need to know its worth.

One of the best tools to keep track of overall agency value is your management system. Management software with integrated accounting and customizable reports, like SIS’s Partner XE agency management system, make tracking and reporting your agency’s value easy.

To find out more about how SIS and Partner XE can help you track and grow your business, contact us at