Why Succession Planning for Financial Professionals Matters

May 19, 2023 |read icon 6 min read
Colleagues plan at a whiteboard

As an insurance agent, wealth manager or retirement planner, you probably spend most of your days ensuring the financial security of your clients. That security becomes doubly important when your client is a small business owner. But have you spent the same amount of time and attention ensuring the security of your own business?

Whether you are the head of a small family business or the principal of a large practice, succession planning for financial professionals matters. And the sooner you get started creating your own succession plan, the better.

“Succession planning is one of the most critical processes producers can undertake to ensure the value of their business,” explained Beth Goldsmith, second vice president, practice management and development. “If you don’t have a plan in place, it can make an incredible impact on the value of your business. At Ameritas, we want to help ensure that our producers’ business—and families—remain secure. To do that, we’ve dedicated a significant focus of our practice management team to this process.”

What does succession planning mean?

Succession planning is the process of ensuring that your practice will continue with minimal interruption after you leave the business. It involves identifying the key employee or employees who can step into a leadership role once you’ve left, so that your practice can continue to thrive.

“In most small businesses, we can point to one or two leaders who are really dictating the future of that business,” Beth said. “But what happens if there is no designated employee who can take over, when you’re ready to retire or exit the business? It creates chaos—for your business, for your family and for your clients. That’s true for any small business, but it’s especially true for financial services practices, because of the number of lives they support and the families and clients entrusted to their care.”

Without an effective succession plan in place, there may be a gap in leadership. This can lead to a loss of clients, revenue and even employees. In addition, the instability can significantly impact the valuation of the company.

According to the Succession Resource Group, an expert in helping advisors with valuation and succession planning, insurance practices without a succession plan can lose anywhere from 10% to 30% of their business value if forced into an emergency sale.  (successionresource.com)

In short, succession planning for financial professionals is an essential part of ensuring the long-term success and stability of your practice. It will help you find and develop future leaders, recruit and keep high-level employees and prepare for unexpected events.

How do you get started?

To begin the succession planning process, first consider what type of business you lead. For family run insurance practices, it can be a little more straightforward to identify the candidate to take over. “At Ameritas, we’re very invested in the concept of legacy,” Beth said. “We have a lot of agencies where that legacy is identified as part of the family – someone who has grown up watching their parent go to Leaders Conference every year and has possibly even gone with them.  We have multiple second, third and even fourth generation agents, and we have seen first-hand the strength of their business.”

If your insurance practice is not family owned, and you don’t have an obvious successor to share in building and continuing the business, it becomes more difficult. This is where the Ameritas practice management team can step in. “We are most proud of when we’ve been able to help and support people not only with identifying outside talent who can help keep the continuity and strength of the business, but also recognizing talent inside their organization who can be nurtured and supported as they prepare for that top role,” Beth said.

Key steps for an effective succession plan

The practice management team at Ameritas has developed a complete support system for succession and continuity planning, including checklists, templated forms, sample agreements and third parties to help producers through this critical process. These steps form the backbone of most effective succession plans:

  • Identify key employees: Which employees in your firm have the potential to take on leadership roles in the future? These are individuals who have the skills, experience, drive and commitment to company culture to lead the company.
  • Develop a plan for development: Once these key employees have been identified, it’s important to develop a plan to ensure they’re ready to take on a leadership role. This may involve providing training, mentoring, leadership development and other opportunities for growth within your practice.
  • Create a timeline: Succession planning isn’t a one and done process, and it’s important to create a timeline. This can involve setting goals for development, identifying key milestones and creating a timeline for the transition of leadership.
  • Communicate with your employees—and your clients: While it can be challenging to introduce the idea of change to your employees and clients, it’s critical to the success of your plan.
  • Review and update regularly: Succession planning shouldn’t be a one-time event. Expect to review and update your plan regularly. This will ensure that it still is relevant and effective, especially during times of dramatic change.

A personal approach to helping you manage your business

Whether you have questions, need additional guidance, or simply want to talk with other producers who have gone through this process, the Ameritas practice management team is ready to serve.

“So many of our agent partners work selflessly all day long to take care of the lives of their clients,” Beth said. “It’s a big responsibility to take time to work on their own business. That’s why at Ameritas, we’re here to help you work on your business, not just in it.”

To facilitate succession planning in 2023, Ameritas has identified a core group of producers and broker dealers to ensure that they have succession and continuity plans in place that are right for their business. “It’s a major initiative for us,” Beth explained. “We have field members who have been through the planning process with us that are sharing the word, helping to shine a light on this. Their stories are remarkable, and we look forward to sharing them with all our producer partners. Knowing that your business is safe, and that your future is taken care of, is an incredible asset for any business. It’s very powerful.”

To learn more about succession planning, you can download our Succession Planning Guide or contact our practice management team for personal assistance.


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