Brokers uncomfortable with succession plans, says CEO

by Mackenzie McCarty12 Mar 2013

As more and more brokers hit retirement age, many are neglecting to arrange on-going support for their clients, says Choice CEO, Stephen Moore, but being proactive on succession planning can reap big rewards.

“It’s crucial for brokers to develop and actively implement a succession plan. Understandably, a number of Australian business owners don’t feel comfortable with facing the reality of discussing death or illness - and succession planning falls in the same category.  However, given the ageing broker population, this is not something businesses can afford to shy away from.”

Research shows clients tend to opt for brokers who are roughly the same age or slightly older than themselves, which can mean that brokers end up retiring around the same time as many of their clients.

Geoff Rimmer, head of private wealth services at Equity Trustees, says that when advisers take over a retired colleague’s client list, they don’t always have the same loyalty or empathy towards the client as someone who has developed a relationship over time.

Brokers need to establish or reinforce relationships with the next generation of the client’s family, says Rimmer. If this process is handled well, positive service during retirement can add a new generation of clients through enhanced family relationships.

Moore says his aggregation business aims to ‘marry up’ brokers looking to exit their business with a broker who has similar philosophies and business acumen to ensure a smooth transaction for their clients.

“We do occasionally see extreme age gaps that may not resonate. For instance, if a client is in their 60’s and is working with a broker in their 20’s, then this relationship may need more work from the broker, however this is not a strict rule of thumb.”

While Moore says it’s encouraging to see so many people retire as experienced brokers, he’s also worried the industry isn’t attracting a younger demographic to take over and says aggregators ultimately need to ensure their brokers have the right succession plan in place.

“Brokers need to implement the plan well in advance of transitioning out of the business, so it’s a conversation we like to have with brokers sooner rather than later. At Choice, we also help our brokers by providing them with a range of tailored communications to their clients to ensure a smooth transition.”

Planning is everything, says Moore.

“Part of any good business plan must include a plan for exiting the business. Choice is committed to supporting brokers throughout all stages of their career, from entering the industry to expanding and diversifying an established business, to assisting broker’s transition into retirement.”


  • by Broker IQ 12/03/2013 11:05:48 AM

    This further supports the notion that broker's lack commercial acumen. Succession planning is a fundamental piece of a business plan. It's astounding that brokers continue to be complacent and ignorant with their "business".

    Aren't they professionals?

  • by Freshwater Financial Services 12/03/2013 3:28:46 PM

    Succession & retirement planning is a process not an event. In our discussions with brokers considering exiting the industry we have found many are looking for an alternative to a one-off payment for their book or letting it run-off. We offer a service to extend the quality and life of the book by managing their book for them for a percentage fee.

  • by 1martym1 12/03/2013 3:38:34 PM

    When you can only get 1.5 / 2 times annual trail income for your business or effectively less when you allow for vendor financing sucession costs it would be generally be just as profitable to let it go into run off. Sad but true. Maybe not an unsavy as you think.