8 questions to ask about your succession plan

Karl John Krokosinski, a 37-year MDRT member from Vancouver, British Columbia, Canada, has advised on more than 100 succession plans. Whether you’re the one leaving or taking over someone else’s business, Krokosinski recommends asking these questions:

1. How long has it been since the last time you/the transitioning advisor saw the client? “If it was 10 years ago, good luck with that,” Krokosinski said.
2. Are contracts in the file premium-paying or all paid up and drawing down assets? This may impact how you feel as a buyer, he said.
3. How many generations of families were being served? If the advisor is only serving a father, Krokosinski said, and has not met the son or grandfather, it will be a challenge maintaining the family’s business when you take over.
4. What information is inside the client files? This should include, among other things, names and birthdays of spouses and kids, plus anniversaries, pictures and more. Does this also include the most-recent needs analysis, done within the last 12 months?
5. Did the previous advisor actually communicate to the client what they did and didn’t do? There may be opportunities to address previously unaddressed items.
6. What agreements do both people have in place? Whether it is wills, powers of attorney or buy-sell agreements, make sure all documentation is clear, including what happens if someone gets sick or dies, just like you would with a client, Krokosinski said.
7. Can you actually sell your practice to somebody? Some companies reserve the right to tell you who you can and can’t choose.
8. How is the company branded? Krokosinski discourages people from using their own name in a company name. If you’re taking over a practice like that, however, it is a marketing opportunity to reach out to clients and let them know the name of the company and people involved are changing. This can even be thrown as an event for clients to meet new staff.

• Learn more in the Round the Table cover story “Why succession plans fail”
• Watch two MDRT members explain how to “Acquire a practice and create a legacy”
• Read how to increase the value of your business before selling