Making Up Your Mind

For those that really do want to perpetuate, it can be done, Wepler says, and the hard work is worth it.

For many independent agency owners, the last thing they want to see happen to their agency when they are ready to retire is to have to sell it to a banker or a public broker. They would prefer to keep it independent and perpetuate, that is, sell it to the folks who have helped them build the agency into a successful operation. But perpetuation is not always the easiest way to go.

The way John Wepler tells it, making a decision on whether or not to perpetuate your insurance agency when it’s time to let it go reminds me a little of that old Lovin’ Spoonful song. You know how it goes …

Wepler, president of the national consulting firm Marsh Berry & Co., says the actions necessary to prepare your agency for perpetuation are not often easy and some (producers) may at first think they’re not very kind.

Some agency owners, according to Wepler, may want to make the difficult changes to the way they run their agency but don’t know how. Others don’t know how and don’t want to. Still others want to and are savvy about how to accomplish that task. Those are the lucky ones.

For those that really do want to perpetuate, it can be done, Wepler says, and the hard work is worth it. Among the tasks necessary to prepare for the eventual transition are: assessing a true valuation of the company; shoring up the agency’s balance sheet; paying the owner what they would make if they were on salary elsewhere; setting goals for producers for bringing in new business and making sure that they achieve those goals; training producers to buy stock in the agency early on; and getting the all the employees in the agency involved by creating a whole agency sales culture.

Wepler explains his approach to passing on one’s agency to the next generation and still being able to retire in style in “To perpetuate or sell — it’s a big decision to make,” on page 56.

Agencies can perpetuate, but if you really want to do it, you’ve got to get off the fence — and finally decide.