OTHER PAGE

THE WORLD’S WORST KEPT SECRET: Transition Planning In Insurance Agencies

Agencies who have Perpetuation Plans in place that will transition agency management and ownership from one generation to another often fail to properly implement the Transition Plan or do it in a way that actually hurts the perception of the agency. There is a way to complete the Perpetuation Plan with a Transition Plan that casts a positive image on the retirement of one owner and the assumption of control by another.

‘The World’s Worst Kept Secret’ is a way of completing the Perpetuation Plan with a Transition Plan that casts a positive image on the retirement of one owner and the assumption of control by another.

The reason the Plan is called ‘The World’s Worst Kept Secret’ is that before the public announcements are made, private meetings are held to inform the most important players of the transition in a way that casts a very positive perception on the move.

The people most important to an ownership/management transition are the employees, the key clients, the carriers and the local community. In each of these cases, if either a curt public announcement or no announcement is made, a suspicion is always present that a) the owner is being forced out, or b) business is bad and the owner is bailing out. Of course, neither suspicion is usually true, but perception often overcomes reality, and the agency must suffer through trying to convince everyone that the new owners are as capable as the retiring owner and that nothing wrong caused the transition.

‘The World’s Worst Kept Secret’ begins with an announcement to employees of the impending retirement. You must never permit the employees to find out about the retirement from outside the agency. This meeting is held by the retiring owner and is used to praise the employees and the new owners and to assure everyone that this is a friendly departure. Ask the employees to keep the information confidential until the public announcement is made.

Once the employees have been told, the owners customers are re-assigned to new owners or producers who will spend time visiting each account with the owner to be introduced as the owner’s protégé. During this meeting with the client, the owner will tell the client “confidentially” that he will be retiring soon and that he has the greatest confidence in the new owner/producer.

The next step is for the owner to contact carrier managers to inform them “confidentially” of the impending transition, as well.

Obviously, the news of the retirement will spread far and wide within a few days of informing the employees, clients, and carrier management. It has become “The World’s Worst Kept Secret” and can now be officially announced in the newspapers and through general letters to all agency clients.

I also suggest a retirement party that is attended by a wide cross-section of clients (those with whom the retiring owner has an established rapport), all employees, carrier management and line employees responsive to the agency, and community leaders. This party allows the new owners and others to praise the retiring owner, and allows the retiring owner to praise the new owners and to publicly express full confidence in the new agency management team. This public display of confidence eliminates any possible perception of weakness in the agency’s evolution.