Should your kids be your succession plan?

Steven Wang joined his father’s business at 24 years old. For the next eight years, his performance was … not great.

“I sucked,” he said. “There were some days when I’d show up at noon to go to work.”

Obviously, the nine-year MDRT member from Irvine, California, has come a long way from that era. Yet it’s important to recognize why he struggled so much at first: Joining the business at his father’s insistence, the work was not his passion. This was not good for Wang, his father or the practice’s clients. Only after his father died and Wang saw how much life insurance helped his family did he develop his purpose for protecting clients in similar situations.

It raises an important question: Is it the right move to make your child your succession plan?

Don Schwerzler founded the Atlanta, Georgia-based Family Business Institute more than three decades ago, runs the website family-business-experts.com and has consulted on hundreds of family businesses. He said the next generation’s emotional investment is crucial to bringing them on board.

“If the kids don’t have that, part of our job is sitting down with mom and dad to realign their expectations,” he said. “It may be better to prepare the business for sale rather than looking to pass it on to your kids.”

Because any number of issues may arise with an unmotivated employee, especially when that person is a family member. “A father called and said, ‘I’m having a problem with my son-in-law: He doesn’t seem to want to come to work, but I don’t want to fire him,’” Schwerzler said. “You get some very emotional and difficult issues you have to resolve.”

In another case, an advisor turned his business operations over to his son-in-law, and after 10 years found out the son-in-law was having an affair. The father fired him and tried to retake the business. He suffered a fatal heart attack nine months after attempting to transfer ownership, reconnect with clients, and adapt to new technology and staff.

“He worked himself literally to death,” Schwerzler said.

See more insight from members in this Round the Table article.