As advisors, we’re all part of an aging group. Many of you are now in your 50s and 60s, and with every year of experience, you’re only getting better at what you do! However, one thing that’s becoming more relevant for many of us is “Business Succession.”
For those of you who are wealth advisors, you’ve likely built a solid investment business. Along the way, many of you have also written life insurance policies for your clients, and in some cases, long-term care and disability income policies too. But here’s where the challenge often lies—when the time comes to sell your investment book, the advisor you’re selling to might not be interested in the insurance part of your business. This means you could end up with little or no compensation for that valuable part of your practice.
Let me share a real-life example—my own. The good news is that there’s a solution that worked for me, and it could work for you too. Four and a half years ago, after more than 40 years in the financial services industry, I decided it was time to step away from full-time work. Like many of you, I had built a strong base of investment clients and written insurance policies along the way. However, none of the investment firms courting me were interested in the insurance side of my business. Insurance wasn’t their focus, so it didn’t hold any value for them.
That’s when I had an idea—why not sell my practice to two separate firms? One could take the investment portion, and the other could take the insurance piece. And that’s exactly what I did. My nephew, Kevin Klaas, of Monarch Solutions, ended up purchasing my insurance business. Monarch wasn’t a competitor to the investment firm that took over my clients since Kevin doesn’t deal in investments—he focuses entirely on life insurance, disability income, and long-term care.
When it came to compensation, I had two options for selling my insurance book: I could take a lump sum over two and a half years, or receive a percentage of the new insurance business written over a longer period.
This arrangement provided me with a nice financial return, and it also ensured that my insurance clients were well taken care of in terms of policy service and future insurance needs. Kevin provides insurance reviews for the clients. What could have been a situation where I received nothing from the investment buyers turned into a great compensation package for the insurance side of the business. My clients benefited too, as they were placed with a firm that specializes solely in insurance and offers exceptional service.
For those of you considering a commission-based payout, an added bonus is that Kevin is very skilled in advanced life insurance strategies. Monarch Solutions has acquired numerous life insurance practices and serves around 4,500 clients across 43 states. With an excellent back-office team, they deliver top-notch, “red-carpet” service.
If you’re thinking about retirement, even if it’s still a few years away, don’t hesitate to reach out. Getting this information ahead of time can provide you with peace of mind when the moment finally comes. Wishing you all the best when retirement eventually knocks on your door!