HUB Financial plans to launch a new succession planning program for its advisors sometime in April or May. The program will also make some kind of financing available, but the managing general agency has yet to determine what form it will take. In an interview with The Insurance and Investment Journal, HUB Financial CEO Terri Botosan said that HUB is currently sending advisors who are interested in financing business transfers to its partners, such as BMO Harris Private Bank and Manulife Bank, who fund these types of transactions. She plans to go further by offering a structured succession program to HUB advisors.
In fact, she says there is a growing need for this kind of program. “There may not be a lot of advisors selling blocks of business right now, but on the other hand, succession planning is becoming more and more important in their view,” comments Botosan. “In fact, advisors are beginning to understand that they are ageing, and if eventually they become ill, become disabled, or even die without a plan in place, it can be very difficult for the successor to take on the business.”
Botosan has put her executive vice president of brokerage development, Tony Bosch, in charge of the operation. The program will help advisors to examine questions that would otherwise remain unanswered, such as what is their succession plan, explains Bosch.
Financing with a partner
Too often he finds succession discussions are limited to the sale price. Bosch observes that experienced advisors will say to themselves that, if they can’t get the price they want, they might as well stay on and keep doing what they’re doing. “You have to start the dialogue about what the advisor wants for the future, what he expects of his successor and how he plans to retire. The question that is the starting point is: ‘Do you want to sell your book of business or not?’ You have to go through these steps before moving forward. Often, these questions are not explored but only asked,” he says.
The new succession program for HUB advisors will facilitate the transfer of clients in different ways. “We will offer financing with a partner, probably a bank,” reveals Bosch, who says the funding will be determined by, among other things, how the selling advisor’s business is structured and the cash inflows it generates.
The program will include a component for family succession. “There’s a great opportunity for generational business succession. We’ve seen a few but they worked very well. Our program will address the question of bringing a family member into the business, because I think it’s a whole different evaluation and dynamics,” comments Bosch. He also points out that simply being a member of the family is not enough on its own. The skill set also has to be there.
Whether the successor comes from within the family or from outside, the program’s objective is to encourage advisors who are thinking about retirement to begin considering the subject as soon as possible, and to form a clear idea of what they want to accomplish. “Most of the advisors don’t know exactly what they want, and if they don’t (understand this), they can never find a proper solution.”