In recognition of "What will be your legacy?" month (August), we encourage everyone to reflect on how they will create their legacy.
When you’re planning or building a business, you’re not typically thinking about your business without you in the picture. Regardless of whether you’ve been in business for one year or 20 years, it’s time to make a legacy plan for your future business.
Talking about your Legacy doesn’t mean you’re stepping away from your business. It simply means you’re building a company that will last, even if you are no longer around to manage it. Legacy doesn’t just protect your business in the event of death, but also in the event of retirement or succession.
If you have thought about the “what ifs” but taken no action, your business is in limbo. In 2024, research by Nationwide revealed that one in three principal agents expected to retire later than planned, and 33 percent felt unprepared.
Why do so many agents put off legacy planning? Like other professionals, they are busy with clients and trying to build their business portfolio. Agents may also think, “I’m not retiring yet.” But as time marches on, they may have an epiphany, such as, “I should have done this years ago.”
Legacy planning may seem as simple as a will or as complex as determining your business’s value, tax implications, legal transfer of ownership, and maintaining a brand. Before creating a legacy plan, you must decide if the business you've built has value.
In all likelihood, you’ve poured your time and energy into building a book of business, which is a valuable asset. Figuratively speaking, take a step back and examine your business closely. All of your work has value beyond today.
In the insurance world, your book of business isn’t just a spreadsheet or a listing of clients and the carriers you work with. It is a relationship you’ve nurtured and grown. Protecting that asset will enable you to continue serving your clients and providing for your loved ones.
Ask yourself these questions, and you’ll be able to see why every agent needs legacy planning.
- What would happen to my business if I were unable to work tomorrow?
- Do I have my login information, client files, and tools organized in one secure place?
- Does anyone, besides me, know how to access my systems or service my clients?
- If something happened to me next week, would my clients know what to do?
- Have I designated someone to take over temporarily, or permanently, in an emergency?
- Is anyone else trained or familiar with how I run my business day-to-day?
- Have I written down my wishes for what should happen to my book of business?
If you answered “No” or “I don’t know” to most of these, you’re overdue to begin legacy planning. Plan for yourself the same way you help your clients plan every day. We’ll walk you through a few steps to secure and protect your business.
Step 1: Start the conversation and schedule time for yourself
Formally, block off time to accomplish some legacy planning for your own business. Clear time for talking to your spouse, family, or beneficiaries. Discuss details of your business, what they need to know, and establish their role or responsibility should something happen to you.
If you have a business partner(s), you may need to consider legacy planning, but it doesn’t mean it will be easy. If each one controls certain aspects of the business, you still need a plan if something unexpected takes either one of you out of the company. Revisit your plans yearly.
Legacy planning may seem like a distant future concern, but resolving this aspect of your business will ultimately make you feel more in control. If you’re not prepared, imagine how your family and clients would react if you were suddenly gone, and your family was also responsible for the business.
Step 2: Document, document, document
It’s time to make your idea a formal plan. Good intentions do not take the place of documenting your wishes and long-term strategy for your business.
These steps are the most basic form of planning, but crucial, nonetheless. Tap your resources to work with your Certified Public Accountant (CPA), a Certified Financial Advisor, or a professional you are comfortable with who will guide you to have all of your paperwork in order.
No matter who you choose to work with, having all your affairs in order will simplify the process and keep your focus on your future business. A good advisor will help you assemble the necessary paperwork, but knowing your plans in advance will save you time and money.
Here are a few things to get in writing as soon as possible.
- Who will inherit your book of business?
- How will your clients be serviced in the event of your absence?
- Will your beneficiaries receive commissions from sales?
- If you are a co-owner, what are your plans in the event of an unexpected occurrence affecting you or your business partner?
- Who will have access to your secured login information, your CRM, licensing, carrier contracts, commissions, etc.?
- If you are with an FMO or other entity, what happens to your book of business and commissions?
- Do you have a letter of intent? This is a non-binding document that states your intentions and may guide some decision-making until your legal paperwork is finalized.
Step 3: Select your legacy partner
Your legacy isn’t just about your book of business and who you leave it to, but also that they can service that book. The person you choose should be licensed and be able to continue your client relationships. They should legally be able to accept commissions and preserve your reputation.
You’ve built a business on your name. It’s your brand, your calling card. Consider your clients and who would treat them the way you do. The continued commissions are based on a policyholder’s satisfaction with their continued service, or they will move to another agent.
Who will be the best fit for your business? A trusted colleague, a family member, a business partner, or your FMO? It’s essential that whoever you choose will prioritize your clients. Your chosen representative will take on the clients professionally and emotionally.
The right representative will help clients through the loss, prevent further confusion, and assure them that they can count on the same service and attention to detail. Make sure whoever you choose to pick up your torch knows how to carry it.
Step 4: Create your plan and update it regularly!
Your legacy plan is a living extension of your business. As your business grows, so does the depth of the plan. As an agent, you know “life happens” and changes need to be updated regularly, but no less than once a year.
Set an annual check-in. Why not during “What will your Legacy be month?” in August. Have a stored document to track updates. Then, you’ll be ready for your regular Legacy update meetings.
What should you be updating? Be prepared by maintaining a list of up-to-date logins for every area of your business. Document new systems and processes in your office that may need to be shared.
You’ll also want to keep up with new carriers, clients, partnerships, and your business network. Think about your family situation or successor changes in responsibilities. Stay informed about new laws and licensing requirements that may affect your business.
You would not advise your clients to buy a policy and only check in on it every 5 or 10 years. So why would your Legacy plan be any different? Set at least a yearly check-in to update your plan because your Legacy plan is only as strong as its last update.
What is your next step?
Messer is the only FMO to offer the Legacy Addendum program that protects an agent’s book of business. This program is a contract that ensures an agent’s MA and ACA commissions can be paid to their chosen beneficiaries upon their passing, even if the beneficiaries aren’t licensed.
The Legacy Addendum is offered at no cost, is optional, and revocable at any time by the agent. Messer knows that agents protect their clients, and with Legacy Addendum, Messer extends that same protection to agents.
Messer agrees to pay the full amount of collected commissions to the agent’s beneficiaries. Agents can take comfort in knowing their legacy is protected for their loved ones. Beneficiaries will receive payments for up to 10 years, as long as the policies remain in effect.
If your FMO offers a succession plan, ask what it covers. If you don't have a succession plan, reach out to Messer. Ask about our programs, being vested from day one, and enjoy the benefits of having an FMO who has your back.
Click HERE to learn more about the Legacy Addendum.
