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What to do for Your Clients Over the Holidays

Posted By Bryce Sanders, Tuesday, November 27, 2018


December is fast approaching. The holidays are a time of good cheer. You’ve had a good year. Your clients made this possible. You want to have a long-term relationship with all of them. What could you do over the holidays?

Obviously you aren’t going to give cash to a client. It screams kickback. The financial industry has rules regarding the giving and receiving of gifts. Gifts should be nominal. FINRA rule 3220 references $100 as a value. Your firm likely has rules. Here are some ideas:

1. Invite some clients to (your) holiday party. Clients become friends and vice versa. If you entertain at home, invite a few clients to attend. Your professional relationship isn’t discussed during the event. They are friends.

This simple act of kindness can have enormous benefits. They may reciprocate by inviting you to their holiday party. You get to meet their friends. This is a good reason to hold your holiday party early in the season.

2. Holiday open house. Here’s another at home event. It works if you are friends with lots of clients. Consider having a noon to 5 p.m. holiday open house at your home. People stop by as they run their errands or on their way to another event. They stay a short while and exchange holiday greetings.

3. Gift to their charity. They have a favorite cause. You are peripherally involved because they transfer gifts of securities. They’ve made the charity an IRA beneficiary. You make a modest charitable contribution in their name.

4. The coffee mugs. This requires some judgment, because it might be salesy. Your firm produces a tasteful line of logoed accessories that don’t look cheap. You but them a pair or foursome of mugs, wrapping them nicely. If they put them into use, they see the firm name daily.

5. Food items. They are coffee fans. You buy an unusual type of whole bean coffee. You present it as a gift.

6. Framed photo. They attended a client recognition event earlier in the year. They sent you a photo from their vacation. Either way, they look great. Maybe you somehow get a photo of their pet. You get a high-quality copy made professionally, then find a good frame at Ikea or someplace similar. People love photos of themselves.

7. Tickets to the holiday concert. Most communities have one. Tickets are nominally priced. You are planning on going too. You present them with a pair, along with an article talking up the event.

You are invited to a party at their home

What greater compliment can someone pay? You are an invited guest. You will meet their friends. You need to bring a house present. Being smart, you avoid the obvious blunders. You don’t bring wine to an alcoholic or sugar cookies to a diabetic.

1. Champagne. Can you ever have enough over the holidays? You want true champagne, from that region in France. Stick with a recognizable brand name.

2. Large format bottles. Wine does come in bigger sizes than double bottles. Bottles containing three liters (four bottles) are often called Jeroboams. They make a statement. (These are not boxed wines or jug wine!) Ask your wine store to look out for them and tell you when they arrive. Look for something from Argentina, Chile or California. Ideally at $50 or less. On both of the above ideas, be sure to attach a gift tag.

3. Flowers. Send them in advance. It will help with their decorating. They will know they came from you.

4. Ornament. If they have a wonderfully decorated tree, bring along a fancy ornament that’s been elegantly wrapped. They should remember you for years afterward.

Gift giving over the holidays doesn’t need to be an extravagant expense. You are thankful these people are your clients. You want to show your appreciation.

Tags:  clients  gifts  holidays  insurance agency 

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Business Plan How-To Guide

Posted By Administration, Tuesday, October 30, 2018

What should make up your business plan? There are seven essential sections.

1) Executive Summary

Though it is the first section of your plan, it’s better to save it for last to write. Because this section summarizes the fundamentals, it’s better to first write the rest of the plan. It will make it easier to write the executive summary.

There is one thing you must include. What it is you want. State what it is you’re looking for so the readers of your business plan don’t have to hunt through the document to find that information.

2) Agency Description

Describe your business, its purpose and your vision. What do you want your agency to look like in the future? What are your values? What’s important to you? This doesn’t need to be lengthy. You can sum it up in a purpose or vision statement.

List your goals and objectives. Goals are what you hope to accomplish in the long term. These can be in terms of profitability, market share, etc. Objectives are more short-term and specific. They describe the actions you will take to reach your goals.

For example, your goal might be to become one of the top 10 agencies in your city. Your objectives could include to quote 150 policies a month and close 30 percent of them. Another objective could be to retain 85 percent of your customers a year. One more might be to cross sell one line of business to clients and close 40 percent of them. These objectives would help you toward your goal to be a top 10 agency.

Detail your strengths and core competencies. What is going to help you achieve those goals and objectives?

3) Market Analysis

This section should include a SWOT analysis evaluating the strengths, weaknesses, opportunities and threats for your agency.

Describe the industry and what factors are affecting it. What are the current trends in growth and customer behavior and preference? What are the opportunities and potential threats in the industry?

Identify your current and future target markets. You’ll have more than one customer group. Build very specific outlines or buyer personas for your most important groups. If you’re selling to consumers, use factors like age, gender, location, income level, social class, occupation, and education level. For businesses, use industry, location, size, quality, coverage, and price sensitivity. 

You’ll also need to include a competitive analysis. Who are your competitors? Do they compete with you for certain customers or products? Or do they compete with you on all products and all customer groups? What is their market share? What are their strengths and weaknesses? How do you compare? What is your competitive advantage? What makes you unique? Don’t say service.

Explain the barriers you face. This can include, but is not limited to, high costs in capital, labor and/or marketing. It also can include brand recognition, training and skills, and technology. How will you overcome these barriers?

4) Management and Operations

What is the legal structure of your agency? C or S corporation? LLC? General or limited partnership? Who are the owners and what is their percentage ownership? What is the extent of each owner’s involvement with the agency? Also, include profiles of your management team. What is their background, qualifications, expertise?

Do you have an advisory board you meet with once a quarter? Who is on the board? What is their background, etc.?

If you have employees, you should detail the roles and responsibilities. How many employees? How will you recruit new employees? How will you train your current and future employees? Include an organizational chart to show who does what.

What is your physical location, and its strengths and weaknesses?

Don’t forget about your agency technology. List each, including your comparative rater and/or agency management system and how each contributes to your operations. Include your plan for any new technology or upgrades.

5) Products and Services

What lines of business do you sell? Do you offer add-ons, like roadside assistance? Do you offer any services in addition to insurance? Are there new lines you should add?

What do you do after the sale? Do you perform annual policy reviews? 24/7 help with a call center or live chat?

While you don’t set the price of the policies you sell, you do need to describe your commission or fee structure.

How do you onboard carriers to your agency? What are your plans for new appointments?

6) Marketing and Sales

Now you talk about how you’re going to get customers and grow. Describe the growth potential and opportunity for an agency similar to yours. What is your growth strategy? How are you planning to grow your agency? Organically or through acquisitions?

How are you going to reach potential customers and market your agency? What’s in your agency marketing plan? Advertising? Community involvement? Online marketing? Buy leads? Partner with potential referral sources?

What about your agency’s visual brand? This could include your logo, insurance agency website, business cards, signage, marketing materials. Are you going to be using technology like email marketing or marketing automation?

How much are you going to spend on marketing and when (startup or ongoing)? If it’s an ongoing expense, add it to your operating plan budget.

Who is going to be selling for your agency? How will you recruit and train producers? How will you compensate them?

Include a sales forecast based on your past sales experience, marketing strategies, research and industry data. You might consider doing two forecasts. Your best guess of what you expect and a worst case scenario that you’re confident you could meet no matter what.

Set a goal for your commissions for the first year. Then you can figure out about how many policies you need to write a month, which then helps you know how many quotes you need to be doing a month.

7) Financial Projections

You will need to create forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. 

And remember, your business plan is a dynamic document. It’s not something to do once and forget about it. You will need to review it at least once a quarter to check your progress.

If you’re feeling overwhelmed with all the items to include in your business plan, don’t worry. There are many resources available to you.


How to Create a Business Plan for Your Independent Agency

How to Create a Simple Business Plan

How to Create Financial Projections for Your Agency's Business Plan

The Planning Process

How to Build an Insurance Agency Business Plan

A Sample Insurance Agency Business Plan Template

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12 Things You Should Know Before Starting Your Own Insurance Agency

Posted By Frank Medina, Tuesday, October 30, 2018


So you like the idea of starting your own insurance agency but are not quite sure where to begin or what it will entail?

Well, the first thing you need to know is that there’s a difference between running your own insurance agency and running your own successful insurance agency.

A successful independent insurance agency comes with much responsibility and effort, and before jumping into the pool, you must first understand what is required.

In this post, we will discuss some of the most critical considerations that will impact on your ability to start your own insurance firm and its success going forward.

1) Capital Needed to Start

The lower end of the capital you need can be between $5,000 and $50,000, with more expensive insurance firms ranging from $100,000 to $1,000,000.

This depends on many factors, including location and operation. You can apply for a business loan, of course, but you will need a good credit history, work experience, and a good business plan.

Another option is to look into grants or crowdfunding.

Start-up expenses include rent security deposit and first month’s rent, office equipment, agency management system, licensing and legal costs, and insurance.

2) Getting Access to Insurance Carriers to Sell Products

For new insurance agencies, getting access to insurance carriers isn’t a simple task.

Carriers want to see a business plan, previous loss ratios, and an existing book of business. A commitment to a particular premium volume in a specific time span is another factor.

Usually, agencies that are part of an aggregator will have more access to insurance carriers.

At startup, it is best to only get one or two appointments because you will need to meet carrier requirements.

3) Lease or Buy an Office Space

There are pros and cons with both leasing and buying an office space.

If you opt to lease, there is no down payment, you can deduct lease payments for tax purposes, the landlord is responsible for repairs and maintenance, and you may lease in an expensive area which can improve the visibility of your business to the right crowd. However, you cannot build equity.

If you opt to buy an office space, you can build equity and rent out additional space, have stable expenses, deduct interest payments, and depreciate the building.

4) Buy an Existing Book of Business or Start from Scratch

Before buying an existing book of business, you must look at various factors.

Why is the insurance agency selling their book in the first place? What is the level of automation and documentation? Files should be easily sought through the book. Find out the current market value of the book and if the carriers match up to what you have.

There are listings of agencies on sale online that help you determine the market value. Also, it helps to get some legal advice from a lawyer.

If you don’t feel comfortable buying any agency’s book of business (after research and discussion), then it may be a sign to start your own.

The downside of this is that it will take you longer to build a clientele.

5) Should I Join a Cluster or Do I Stay Solo?

A cluster group is an association of several independent insurance agents.

One reason some insurance agents join a cluster versus staying solo is meeting sale requirements. Certain insurance companies will not allow you to sell their product unless you meet a particular minimum or quota.

In a cluster, the group pools business to qualify for appointment by higher-grade insurance companies.

There are some advantages to joining a cluster, including agency management software, increased negotiation commission rates, and being able to quote specialty insurance. You may have to meet a cluster’s minimum requirements and pay an initiation fee.

However, be careful for red flags like the cluster group asking for part ownership of your business.

Ultimately, it is up to you whether you want to join a cluster or not. Simply make sure the group you want to join is compatible.

6) When Will My Insurance Agency Start to See a Profit?

It is hard to determine when your insurance business will start to see a profit.

The answer isn’t always cut and dry.

Businesses in general, however, can determine profitability by sale projections, gross profit estimate, the cost of providing your services, and other expenses.

In short, the answer depends on each specific business.

7) How Much Can I Make Per Year?

Income for insurance firms will vary based on different factors.

Qualifications, state, region, number of customers, and experience can help you make an estimation.

On average, insurance sales agents make $49,990 per year.

Owners, on the other hand, tend to make more.

For example, the average Allstate owner makes more than $112,000 annually, but again that depends on several factors.

8) Will It Help Me or My Business If I Get Insurance Designations (Certifications)?

Insurance certifications can increase earning potential, professional growth, promotions, and job security.

This can make you more valuable to clients. It is recommended to earn designations, but not a requirement. In order to become certified, you may need to meet certain education, ethics, and experience qualifications.

You will need to pay a fee to take courses and an examination.

For example, the Charter Life Underwriter/Chartered Financial Consultant (CLU/ChFC) emphasizes insurance planning.

These certifications require three years of work experience and you must take eight separate multiple choice tests.

9) How Do I Prospect or Generate New Business (Get Customers)?

Getting new customers can be a challenge, but there are a few things you can do to reach the public and generate business. One way is to form a partnership with a local real estate agent or office.

Networking with real estate businesses (or other businesses based on the type of insurance you sell) is a great idea because those businesses can refer their customers to your firm. Another way is to create a website – or social media page – and reach customers online.

New customers can refer you to their friends, family members, or colleagues.

Also, don’t be afraid to give yourself a professional appearance; brochures, free promotional tools, and other items can be great to help your new firm.

10) Do I Need a Website?

A website would be a great idea to build for a new insurance firm.

Not only will this give your business a professional look, but it can attract new customers. Make sure that the website helps make your insurance company stand out. On the website, add contact information, service descriptions, and testimonials.

Hire a professional web designer and content writer to achieve the look that you are seeking.

The content writer can create original, insurance-related content that will answer clients’ questions.

11) Should I Use Social Media?

Social media marketing is great for advertising new businesses, including a new insurance firm.

Social media websites such as Facebook, LinkedIn, Instagram, and Twitter are perfect for promoting and building a positive public perception.

More brand recognition, increased customer conversion, reduced marketing costs, and improved search engine rankings are some benefits of utilizing social media.

Be aware that there will be competitors and customers who may be displeased with services, and can give your page a low rating (along with a negative review).

12) What Type of Licensing is Required to Sell Insurance?

In order to sell insurance, you must be licensed. The type of required licensing depends on the country and state where you are giving services.

Depending on location, you may have to get multiple licenses based on the type of insurance you plan to sell. Find out the requirements on your state’s insurance licensing board. Applicants may have to take certain courses and training; you may have to take a state exam.

If there are licensing courses, sign up and take them. Register for the state licensing exam and pay the required fees.

And that, in a nutshell are some of the key considerations you need to think about before you decide start your own insurance agency.

While some aspects may seem very daunting, none of them are a barrier too big to overcome.

Do your homework, speak to others who have been in the business and above all, have a positive attitude.

Good luck!


Professional Insurance Agent of Kentucky

Membership in PIAK is an investment that provides tangible benefits and services, saving you time and money so you can increase your agency's bottom line, as well as connecting you with agents at all experience levels across the state and nation. Learn more about membership benefits here.

Kentucky Department of Insurance

Learn about licensing requirements, industry best practices and current state law. Read more here.


Tags:  insurance agency  start up 

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Why YOU Need a Business Plan

Posted By Administration, Tuesday, October 30, 2018

In today’s changing climate, an agency must have a strategic business plan to be successful and high-performing. The fact is, however, that only 10% of us have a fully developed written plan that each member of the agency staff is aware of and following. That leaves 90% of us in a critical time in the insurance industry without the necessary planning tool to help us get to where we want and need to be.

The most frequent excuse we hear for not planning is that an agent has tried planning in the past only to have the circumstances change so drastically that the plan becomes meaningless.

All the more reason to plan!

It is better to have a plan and have to change it than to have no plan at all. If you were taking a trip along a planned route and came to a detour for a bridge out, you would make changes in your route, but your goals, presumably, would still be the same. The same analogy holds true for your agency as well.

As a matter of fact, the reasons those agents give for not planning (constantly changing conditions in the insurance industry) are the main reasons why planning is so important. We must plan for the effects of competition; for increasing soft market conditions; for economic changes in our area (for example: the gasoline crisis facing everyone today, etc.); and, more importantly, for the continuation of our agencies, whether that be internal perpetuation, sale of the agency to a third party or a merger/cluster for strength.

Agencies that incorporate an annual planning process tend to be more efficient, more profitable and highly-valued. Agencies without a plan are totally reactive to their environment and have little control over their future.

What’s the Big Picture?

Strategic planning owes its development to the military. It is the science or art of long range planning and directing large-scale operations. Tactics on the other hand relate to the specific use or deployment of resources to meet a short-term objective. Too often business plans contain only tactics. An effective business plan should be based on a strategic plan.

An agency’s strategic direction is the big picture or the vision that guides the firm along the way. The best way to start the process is to create a mission statement, which should be a clear and specific summary that describes the firm’s purpose. This exercise is a crucial first step for mapping out the firm’s future direction and facilitating the planning process.

The next step is to determine the current status of the agency. Owners and key employees need to look within the firm; they must perform a self-assessment of the agency and its    resources including an inventory of strengths and weaknesses. This allows the planning team members to create meaningful and reachable goals using appropriate tactics.

Well-written strategic business plans capitalize on the strengths of the organization and strive to minimize or eliminate the weaknesses. The major weaknesses can be turned into opportunities for improvement and these opportunities then become the agency’s goals for the coming year.

5 Good Reasons

Strategic business plans are not only essential to proper agency management but they also are now often necessary in order for an agency to receive “preferred” status with carriers. There are many other reasons it is important to go through all the steps to have a strategic plan. Here are just a few that are the most important for agencies.
  1. It helps managers set specific goals and objectives for the business. When the firm knows what the plan is and what the firm wants to accomplish over the next year or so it makes it easier for management to make sure these tasks are completed. Good management needs to set goals and objectives and have a detailed plan to follow up on them.
  2. To see how much the agency is worth. This valuation of the business will be complete once all the steps in the strategic business plan are done. This means that there will be a detailed plan of where the business is now and how much it’s worth. The firm can then set goals on how much growth is wanted over the next year or so and how much the firm could potentially be worth once the goals are met.
  3. This leads to being able to merge or sell a business. In order to do either of these, the agency needs to have a strategic plan and valuation. If an agency is trying to sell a book of business to another agency, the buyer is going to be more interested if there is a business plan. A buyer is more likely to purchase a business where there is a plan and where it is clear how much the agency is worth.
  4. To grow the existing business. A strategic business plan lets owners know where the business could grow over the next year or so. It gives them an opportunity to focus on sales, acquire new clients, and make sure existing clients are using the firm to its full potential. By doing these things, the owners are making the most money in the most efficient and effortless way.
  5. Competition is keen. Expenses must be controlled. Market cycles continue to cause havoc and agency value is at stake. An annual planning and self-assessment process is the key to success. If owners don’t know where they are going, how can they possibly know how to get there?

Make a choice. Take the time to plan ahead and be successful or be at the mercy of the winds of change.

Source Materials:

Why Agency Strategic Planning Is Important”, by Kelsey Johnson and Catherine Oak, July 22, 2017,

The Agency Business Plan: A Roadmap to Success”, by Jack Fries, January 19, 2012


Tags:  business  insurance agency  plan 

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Attracting Younger Talent

Posted By Donna Warrick, Wednesday, October 24, 2018

Culture is Key


Millennials with jobs are more likely to be looking for a new job than any other generation in the workplace, according to a Harvard Business Review article by Brandon Rigoni and Amy Adkins. They report that six in 10 millennials are ready to jump ship at any given time.
This is a challenge for keeping workers, but it’s also a golden opportunity for recruitment. For the most part, these are bright workers who are deconstructing the great American job search.

Firms can seize this opportunity by honing their HR brand to appeal to younger generations and balancing this with assessments that assure a good match with most new hires.

Compensation is still important, but millennials are looking for jobs that are in sync with their values and can help define who they are. Getting hired has become a matter of personal identity.

As an employer, you are being evaluated more than the candidates. How will your firm make the cut? And if you do, will you hire the right people?

Overhauled approach

Major corporations have overhauled their approach in the scramble for talent.

  • General Mills began using virtual reality headsets to allow candidates to see themselves working inside General Mills, including using the company’s gym.
  • Two Volvo engineers recently built a Baja racer for collegiate competitions to attract young engineers to the legacy truck builder.
  • General Electric’s humorous “What’s the Matter with Owen” television campaign said bupkis about GE products. Instead, Owen touted the company’s geek chic HR brand as a bespectacled new employee being effusive about his job of programming life-changing technology to help people.
  • McDonald’s eschews traditional media to engage 16 to 24-year-old candidates via Snapchat, offering “Snaplications” and video clips of young McDonald’s employees talking about their jobs.

Not everyone can serve up cold brew coffee in a corporate cafeteria. Still, there are practical steps most firms can take to enhance their brand for millennial and Gen Z values.

  • Does your organization operate with a high degree of transparency?
  • Is it socially responsible?
  • Do employees have paid leave for volunteer work?
  • Are young team members valued and encouraged to contribute to relevant and visible projects and products?

Are there ways to present your products and services to be more relevant and important to society? For example, a textile manufacturer might not actually make exciting products anyone can buy, but its fabrics are used in the space program or to save lives in emergency rooms. Maybe a law firm has a pro bono clinic for low income families.

Yes. HR needs to make your employer brand attractive to these talented but fickle job seekers, but this doesn’t mean that everyone who’s attracted to your organizational hipness is going to be cool for your company.

Talent acquisition assessments

There are two tools to make sure both parties get what they want. The first is assessments.

Talent acquisition assessments greatly improve your odds of hiring an individual who is well matched to your company’s needs. The best are scientifically valid and EEOC compliant, focusing on the candidate’s motivation and likely work traits as compared to the job description. You’ll save a lot of money in not having to re-hire for a position.

The second tool is the “Shared Success Model,” which is a process hiring managers can establish that aligns individual development plans with organizational strategies to identify where overlap exists and where there may be gaps.

It has five components:

  1. Individual needs—What is important to the candidate, both professionally and personally? What aligns with their values and interests?
  2. Individual offer—What value does the organization bring to the candidate?
  3. Company needs—What does your organization require for success now and in the future? What do you need from your leaders and employees?
  4. Company offer—What is your corporate value proposition to the candidate? What opportunities do you provide? What culture do you provide?
  5. Plan—Analyze the gaps and overlap between each quadrant. Develop and implement a plan that balances your grid for shared success.

As younger candidates seek more of a cultural match, the Shared Success Model is a good way to make sure the culture you promise is a culture that supports your mission and business model.


Tags:  employees  recruitment 

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Suicide Prevention in the Workplace

Posted By Dr. Mark Friedlander and Dr. Christine Moutier, Wednesday, October 3, 2018

Support Suicide Prevention Month


Suicide is a national health crisis, with one person taking their own life every 12 minutes, according to the Center for Disease Control and Prevention (CDC).

Currently, it’s the second leading cause of death for adults ages 25-34 and the fourth leading cause of death for adults ages 35-54, both age groups that comprise the majority of today’s workforce. The correlation between work-related stress and an individual’s mental health is undeniable. Research from AFSP found that among adults who have been employed in the past 12 months, more than one in 10 have missed work days because they were too anxious (14%) or too depressed (16%) to go in.

Employees are a company’s most important asset, and it’s clear that mental health has an impact on their absenteeism, presenteeism and ultimately, productivity — subsequently impacting a company’s bottom line and costing the U.S. economy over $51 billion, according to Mental Health America.

To support National Suicide Prevention Month this September, we challenge employers to consider their role in supporting employees’ mental and emotional well-being. By providing vital resources, creating a positive work environment and continuing to raise awareness across industries, we can make significant progress in reducing the number of suicides each year.

Offering the right resources is crucial

The American Foundation for Suicide Prevention found that 90% of individuals who die by suicide have a diagnosable mental health condition at the time of their death. With Americans spending a majority of their time at work, and nearly a third of adults living with a mental health condition, it is essential that employers offer health plans inclusive of mental health services. One such option is an Employees Assistance Program  (EAP), a resource that provides confidential assessments and services to help resolve employees’ personal or work-related problems that may impact job performance, health or mental and emotional well-being.
Inclusion of services to benefit employee mental health is in high-demand from today’s workforce. AFSP found that the overwhelming majority (92%) of adults in the U.S. feel that health services that address mental health, such as treatment for depression and suicide prevention, are fundamental to overall health and should be part of any basic health care plan — a requirement that was signed into law in 2008 through the Mental Health Parity and Addiction Equity Act.

Beyond offering mental health care through a company’s health plan, there are other resources available for organizations. ASFP’s Interactive Screening Program (ISP), for instance, is an online program utilized by institutions of higher education, law enforcement agencies, workplaces and EAPs that provides a safe and confidential way for individuals to be screened for stress, depression and other mental health problems, and receive personalized responses from a mental health counselor.

Turn the workplace into a safe space

One of the most effective ways to prevent suicide and ensure individuals seek help is to create a supportive and connected workplace culture where all employees are equipped to spot signs of emotional distress in others and support coworkers. There are several resources available to build this positive culture, including the Campaign to Change Direction pledge to know the five signs of emotional suffering (personality change, agitation, withdrawal, poor self-care and hopelessness).

Employers should also consider training managers and supervisors within the company on effective ways to reduce stress, such as setting realistic goals, encouraging open communication, providing constructive feedback and resolving conflicts in a respectful way.

Continue the conversation

Don’t let mental health awareness in the workplace begin and end with National Suicide Prevention Month. Have monthly check-ins with employees to gauge their stress-level, regularly highlight available resources through the company, and have literature available around the office that outlines the risk factors and warning signs of someone who may be suicidal.

Employers can also leverage outside organizations to host educational sessions on mental health and suicide prevention within their companies. For example, ASFP launched a program called “Talk Saves Lives: An Introduction to Suicide Prevention™” that covers the general scope of suicide, research on prevention, and how together, we can prevent it.

Hope for the future

The business case for inclusive health care is clear, from improved employee productivity to engagement. But it’s also about reducing the number of lives lost to suicide each year. Offering employees the right resources, from education around warning signs to available mental health services, at the right time, can save lives.

Tags:  suicide prevention  wordplace safety 

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The Dreaded "P" Word: Perpetuation

Posted By Shawn Moynihan with Laura Mazzuca Toops & Melissa Hillebrand, Tuesday, September 25, 2018


What's YOUR plan?

It’s the one issue that directly determines the fate of thousands of insurance agencies, but few principals like to think about it. Some avoid thinking about it at all costs. Others bristle at the very mention of it.

The dreaded “P” word: Perpetuation.

Such hesitancy could be expected from top agents not wishing to spend valuable time pondering the sunset of their careers. They’re busy selling—and objects in motion, after all, tend to stay in motion. But it’s ironic that so many people who have built a successful business out of selling protection against possible loss scenarios now find themselves hesitant toward putting a plan in place to ensure the stability and futures of the very agencies that took them so long to build.

Yet the facts are these, and they are inescapable: According to recent estimates, the number of employees older than age 55 in P&C insurance is 30% higher than any other industry. With so many veterans retiring, the industry needs to fill nearly 400,000 positions by 2020. The situation is especially dire for independent insurance agents and brokers, where the average principal is pushing 60 and many firms lack formal business perpetuation plans.
In short, if you haven’t yet thought about the development of your own succession plan, you’re already behind the curve.

This sense of unpreparedness speaks to a larger issue: The pressing need for the insurance industry to redouble its efforts toward attracting, recruiting and mentoring young talent. The industry’s pathway to its future can no longer be a rope bridge: If the insurance business is to perpetuate itself and thrive, training the next generation of those who will someday lead it is critical—and a shared responsibility at both the carrier and agency levels. Owning up to that sense of responsibility—to yourself, your family and the industry—starts with deciding who your successors will be.

It’s time to ask, when you are gone, what will your legacy be? Will you prepare for the future by willing years of institutional knowledge and insight (and in many cases, a successful agency worth millions in annual premium) to a responsible person or persons whom you deem appropriate to follow you, or will you spend your remaining years hoarding it and watch it pass into history?

To put it more bluntly: They’re your assets. Do you want them to survive you, and benefit both your loved ones and your business?

If you chose the former, the time is now to start adopting the mindset of succession.

Tags:  independent agency  perpetuation  plan  succession 

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3 Top Succession Strategies

Posted By Rob Goff, Tuesday, September 25, 2018


Which one's right for you?

Whether you are building your book of business or starting to think about retirement in the future, it’s never too early to develop a plan to ensure your business and clients are set up to succeed when you decide to exit.

Planning starts with an understanding of succession strategies and determining which one best fits your practice and time horizon. The first step in developing a succession plan is choosing the right strategy.

Strategy 1: Developing a long-term succession plan with an internal successor

Benefits: Continuity for clients and staff, peace of mind that your business will be in good hands

Challenges: Finding the right successor, longer time commitment required

If you are five to 10 years from retirement, and value continuity of your business processes, client support, investment philosophy and staff, developing an internal successor could be the right approach for you.

This strategy involves thoughtfully choosing or hiring a team member who will purchase your practice when you’re ready to let it go. You will need to invest in training and mentoring this team member on the front end, but as you get closer to transitioning out of the business, you will rest easy knowing your clients feel comfortable with your chosen successor.

You may even feel more confident with the future of the business as you build trust with your successor through years of working closely with them. Developing a long-term succession strategy with an internal successor ensures you have a built-in continuity plan to protect the value of your business.

Strategy 2: Merging with another agent

Benefits: New perspectives, positioned for growth

Challenges: Integration, finding the right business partner

Merging practices is an attractive strategy if you are three to 10 years from retirement and your focus remains on growing your practice. You may enjoy increased value due to new staff members, partnering with advisors with different service models and client strategies, and sharing best practices.

New perspectives and an increase in resources can be a catalyst to grow the merged practice significantly. If and when you plan to retire, you may benefit from a higher sale price if the merged branch has grown. Choosing your partner wisely is critical, since you will likely need to work closely to negotiate a partnership agreement that endures.

Be aware with this strategy that fully integrating your processes and staff into a new merged environment can be time consuming and, potentially, tricky. It’s important to think through this strategy and develop clear responsibilities and expectations of both partners before diving in.

Strategy 3: Selling outright

Benefits: Full liquidity at sale, compressed timeline

Challenges: Potential disruption for clients and staff, higher risk of client attrition

In an outright sale strategy, you choose to sell 100% of the business to another advisor – whether he or she is in your network or unknown. The full liquidity of an outright sale can be attractive, particularly if you know you are ready to leave the business for good to pursue other interests, for health reasons, or to spend time with your family.

With a well thought out deal structure and an attractive payment plan, this exit strategy can be relatively quick. An outright sale also works well for advisors on an accelerated timeline, usually with less than 12 months until they want to sell and retire.

Selling your practice outright can potentially cause disruption among clients and staff, as the change happens more rapidly and less organically than with other strategies. 

There can be higher risk of client attrition with this strategy, which may impact how much a buyer is willing to pay. Therefore, a well thought out plan and transition period are necessary to ensure clients will be comfortable with the new advisor.

ID best strategy for you early in the process

As an advisor, you get to choose how to build and grow your practice, and with succession planning, you can choose how and when to exit and sell your practice.

All three strategies can be successful, and succession planning experts at your firm can be great resources as you build and implement your succession plan. The key is to identify the best strategy early in the process and develop a plan to work toward achieving your goal.

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Creating a Viable Succession Plan

Posted By Matt Lynch, Tuesday, September 25, 2018


Many advisory firms have hit a crucial stage. Most will not pass to an outside buyer or next-gen advisor. Will your firm endure?

With the graying of the profession and the complexity of today’s financial services world, many advisors find themselves overwhelmed and stuck when it comes to creating a viable succession or exit plan. Too many have postponed what should be a long-term process; sadly, these advisors may feel successful now but will be disappointed with the final outcome.

Over the past decade, many firms have applied business discipline to create practices that meet or exceed their personal financial objectives during their working years. That’s a great development for those individuals and the profession. Yet the regrettable reality is that most advisors still fail to plan effectively for a sustainable business that doesn’t require their ongoing personal involvement; a business that would be attractive to a future owner.

Strategic business mindset needed

Having worked with hundreds of advisors and business executives over the years, I believe the most critical transition is not from advisor to business owner but from business owner to long-term strategic business thinker. 

By this I mean having the ability to look at the business objectively, ask and answer the right questions and formulate a strategic plan — whether it’s for business development, operations, marketing or attracting next-generation advisors as a step in the owner’s path to retirement. By “strategic plan,” I refer to a plan that is based upon a long-term outlook — 10 years or longer.

For a long time now, industry experts have been trying to help advisors change their understanding of their firms — to move them away from running a practice and toward running a business. The distinction may seem specious to some people, especially those whose firms have prospered without much tending. 

Moving toward a strategic business mindset becomes crucial, however, when you start to think about your internal succession or exit-sale strategy.

Are you an accidental entrepreneur?

One big problem my strategic consulting team and I have been observing for some time now is that many advisors are actually accidental entrepreneurs. These advisors never really intended to build a transferable business, but somewhere along the way they bought into the idea that they could cash in their chips when they got too old or tired to muster the same energy for the business that they’d had in the past.

Misinformation in the marketplace about practice valuations and the apparently growing number of active buyers led many to believe that even the smallest solo practitioner has built actual transferable equity, and that he or she will enjoy a liquidity event when it’s time to retire. While a practice can provide the founding principal with an excellent income and lifestyle, an outside buyer is unlikely to see that income and lifestyle as something worth paying for — something that is literally valuable.

Those prospective buyers can probably build their own practice, exactly the way they want it, for less cash than buying an existing practice and inheriting all the legacy systems and people that come baked in with a package price.

Improvising as a way of life

As the founding generation of the financial planning industry moves toward retirement, its members are inventing a process for succession or exit planning, just as they invented their practice model. And once again, much of this process is improvised. There hasn’t been much thoughtful methodology put in place for professional financial services firms to employ uniformly, whether for standard evaluation metrics, professional development or, importantly, just creating an attractive future for the next generation of advisors and firm owners.

M&A consultants abound but standards do not, and too much of their time is spent looking in the rearview mirror. Enterprise value — the financial value of a sustainable business — is a function of the future, not of history. While today’s firm founders may have done an amazing job of cutting their service model out of whole cloth, many, if not the majority, have focused on growing their firms primarily to meet their lifestyle needs. As a result, they may have trouble attracting buyers or internal successors.

Entrepreneurial risk and reward

Even those who have been highly disciplined about building a business often didn’t think about developing a new generation of leaders, or about creating career paths that would help the next generation step into leadership or governance roles. They may have taught the next generation how to create a financial plan, use financial planning software and work with clients, but failed to help them see how to embrace the risks of entrepreneurship. They thus fail to understand that business risk, just like investment risk, has the potential to pay off.

To find younger advisors is itself a challenge. The number of colleges teaching financial planning is mushrooming, but the graduates from their programs are still too few to meet the need, and they don’t want to walk out of school and start cold-calling like their forebears did. Some forward-thinking firms are succeeding at recruiting these new grads by building teams that enable them to use the technical skills they went to school to obtain. The new grads want to develop and grow on a personal and professional level.

If you’re looking to develop a successor internally, you’ll likely need 10 years to groom that person. That’s assuming you already have a candidate in mind — that time frame doesn’t include the time it will take to find that person. Of course, you can find and hire someone who’s able to run the business, but will they have all the business-owner skills needed, and can they take the risk of being an entrepreneur as a buyer? 

If the answer to those questions is yes, then it is likely the capable candidate will not be willing to meet the selling advisor’s price for the opportunity.

Culture club

If you’re looking to be paid well as you retire from the business, you have to share “your life’s work” and passion with others and build a culture that prompts the next generation to say, “I want to be part of this.”

If you haven’t dealt with the challenges facing the industry today — what I have been referring to throughout this series as “the three C’s” (consumer preferences; compliance and regulatory challenges; and competitive threats) — chances are that the beautiful mansion you think you built is really a fixer-upper.

You’ll need to attract the right people now, people who will update the business the way they’d want to buy in to it — which also means you need to share some equity as the transformation unfolds.

If you want to build a transferable business, think about the qualitative factors that are essential to your firm’s value: a consistent client service experience, a systematic method for generating new business and a well-defined business model with sustainable margins. These are the qualities that bring multi-generational sustainability to professional services firms.

Skills and career paths

Advisory firms will also want consider the career path that CPAs in private practice typically follow — from paraprofessional to professional accountant, from junior to senior, and eventually on to partner. The financial services world tends to take newbies and tell them that their primary job is to find new clients.

Notwithstanding the fact that this recruiting model hasn’t been truly effective for decades (in terms of yielding an ROI or producing enough new advisors), it has been commonly accepted as the way one must enter the business.

Most young adults don’t have the skills for full-time business development and can’t afford the old “eat what you kill” business structure even if they wanted to try it. Many cringe at the old financial services sales structure — that’s not what they thought they were signing up for when they took on the CFP program investment.

The good news is that by attracting younger staff members that can be set on a career path leading to the role of advisor, you can accelerate the transformation of your firm into its next iteration and use technology to deal with the emerging complexities of compliance and margin compression. What’s more, new graduates of planning programs have experience with the up-and-coming technology that can move your practice forward, making it both more efficient and more appealing to current and future clients.

Of course, training from within requires building a business strong enough to afford staff that may not contribute to the bottom line from the get-go. Translation: An investment in talent is similar to investing in the market — it’s a long-term proposition.

Building transferable equity

Building enterprise value goes far beyond applying normal business techniques. It’s about preparing a business to last beyond the founders — and it typically requires sacrificing some lifestyle income in order to invest in the business. For an internal succession to work, it also requires focusing on a service model and firm structure that’s attractive to young people, who will come in and build your business for the future.

Tags:  insurance agency  perpetuation  plan  succession 

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Maximize the Value of Your Agency

Posted By Stuart Ganis, Monday, September 24, 2018


There’s going to come a time where you will consider selling your agency. However, most agencies don’t have a perpetuation plan.

Some of the toughest situations occur when an agency owner has poor health and is unable to sell on his or her own terms. The children are interested in the business, but don’t have the money. Or the kids have no interest in insurance and the owner has to sell in order to support him or herself in retirement. When an agency owner has to sell, they’re usually not prepared. This gives buyers leverage to negotiate, and worst of all gives you less of a payout than what you deserve.

There are several myths in agency acquisitions, one of them being that agency value is determined by the blood, sweat and tears you invested over the years. Insurance agencies are worth the cash flow available to the buyer when the current owner leaves. It’s not based on a multiple of revenue, how hard you’ve worked or anything else. The cash flow multiple is adjusted up or down based on several factors–and that’s where you can maximize value. Here are a few tips to make sure you get the most out of your agency when you sell:

  • Data: You need accurate data in order to pass the smell test. This includes downloads, management system usage, e-mail addresses, client documentation and other forms of data.
  • Accounting: This is the biggest pain point for buyers and sellers. Your P&L should match your commission statements to the penny. Your expenses should be clear and concise and match your corporate taxes. I’m a big fan of saving trees, but printing commission statements and filing monthly by carrier in bankers boxes will help when it comes time for due diligence.
  • Marketing: Nobody wants to pay top dollar for a declining business with no strategy in place to grow. Investing time and money into building a sales machine will go a long way in not only increasing the value of your agency, but also earn you more money while you are in business.
  • People: Is there someone in your organization who can run the agency for a new owner? Chances are the buyer has other locations or isn’t involved in daily management. Do you have someone there that can manage the day-to-day operations? That’s valuable to a buyer, because when you leave, your salary and expenses go to the bottom line as the buyer won’t have to hire a manager to run the agency. The additional cash flow will make a huge impact on your valuation.

There are obviously other ways to increase value, but you need to cover the basics before anything else. First and foremost: Treat your agency like it’s for sale today. When you create a process, take on a new carrier or invest in technology, ask if it’s adding value to the agency.

Most agency owners sell a business once, but agency buyers have purchased several. This puts the seller at a disadvantage due to the lack of experience, so hire a professional. When we sell our homes, we hire a Realtor. M&A brokers that specialize in the insurance industry will always net you more from the sale then you will on your own. These brokers have experienced multiple deals, different structures and can ask buyers tough questions that you can’t. They usually have a network of qualified buyers so you don’t have to sift through the real buyers and dreamers.

Selling your agency should be a joyous occasion if done properly. Make sure you’re prepared and avoid waiting for hard times to sell.

Tags:  insurance agency  maximize  sale  value 

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