Home Offices Must Get More Active In Staff Succession Plans

The latest LIMRA Industry Trends publication suggests 63% of financial services companies surveyed have developed or are in the process of developing formal succession planning programs for financial professionals who sell their products and services; another 18% offer services to help financial professionals develop a plan themselves, according to LIMRA researchers.

Prior LIMRA research has shown that the two most important factors advisers think about when considering a succession plan are “identifying the right successor” and “feeling comfortable in that successor’s ability to maintain relationships with their clients.” Yet, most companies avoid playing matchmaker and instead merely offer basic assistance with identifying potential candidates and running them through a screening process, LIMRA warns.

LIMRA data also shows that a little more than one-quarter of financial professionals are age 55 and older.

“For many of these individuals considering retiring or taking a less active role in their business, their clients expect a seamless transition from one financial professional to the other,” LIMRA researchers note. “In fact, 99% of clients believe the financial professional they work with has a succession plan in place. In reality, only half of financial professionals report that they are prepared for a transition.”

Additional findings show there is still a significant percentage (20%) of companies that either have not decided the role of the home office in helping financial professionals with succession planning or believe it is the financial professionals’ individual responsibility to do their own planning. Troubling, many of the companies that say they have formal succession planning programs in truth dedicate very few hard-dollar resources, if any, to help.

“Even still, just one in five eligible financial professionals takes advantage of company programs when they are available,” LIMRA warns. “One company surveyed mandates their financial professionals have a plan in place, while a few others offer financial incentives such as providing an allowance to develop a plan; paying the initial enrollment in Financial Professional Transitions Equity Management System; offering a higher buyout for a financial professional’s practice if s/he has a plan in place; or financing a practice purchase. Because most companies take a passive role in helping financial professionals with business transition planning, organizations that offer service and support to assist in developing what is typically a complex and time-consuming task will differentiate themselves from those companies who believe it is not their business to help.”