00:00:12:29 - 00:00:35:27

So, tell me, Hunter. You know, we've got the succession plan and we've got it insured. In writing, legal, booked. You've gone to the bank, bought your shares of Essential Planning. You know what I hear from my colleagues at my age, kind of the first generation is that the second generation is really worried about us just never giving it up.

00:00:35:28 - 00:00:55:25

I think a lot of people talk about the transition and it never happens. They just keep right on working. Is that something that you're worried about? I think so. I think that thought crosses my mind. I know you like what you're doing and you love your time with the clients. And sometimes I think maybe he will be around, and the spotlight will always be on you.

00:00:55:25 - 00:01:18:18

But I know this is your business. I also think that part of my goal is to have this business running as smoothly and efficiently as possible. I think if I am able to do that, you'll see that, and stick around for that and reap the rewards of that. So, I'm thinking maybe that could be a possibility for you sticking around too long.

00:01:19:01 - 00:01:45:26

But I would say I like having you around. I think I like the idea of you becoming the emeritus advisor. That dream that we have of you growing old and visiting the office with the cigar in your mouth and the newspaper in your hand and going in to see your favorite clients and coming out with your notes, handing them off to the team and then being able to leave.

00:01:46:08 - 00:02:13:23

And I think I share that vision. I want that to happen for you. So, I look forward to seeing it come true. Yeah, I think one of the things that, you know, that we've done well is tried not to bite the whole elephant, you know, off in one bite. And the idea that you came up with of transitioning Essential Planning in tranches, identifiable checkpoints, made a tremendous amount of sense.

00:02:13:23 - 00:02:40:29

I think for people who are contemplating a succession plan and to make it work, it has to be very businesslike. I know you like the one-page business plan and, for us, tranche one happened this year. You know, the plan is to buy another 27% or so in five years or less if we're doing OK. And then another five years after that, we'll wrap it up.

00:02:41:03 - 00:03:02:11

If I was trying to do what we've done so far, I'd seek professional advice. I'd make it legal, I'd check around. You bought 22% just six months ago — congratulations. And then the plan is to have another tranche that you'll purchase in five years. Well, maybe a little less if we're really hitting our numbers and goals.

00:03:02:20 - 00:03:24:15

So that would give you just a little bit under controlling interest. And then at the 10-year mark, five years after that, we'd talk about kind of wrapping it up. I just hit 60. And so my plan is to keep cranking for another five years or so and then shift into the emeritus phase for five years.

00:03:24:15 - 00:03:45:16

And I hope quite a few years beyond that. So, Andy, break down our succession plan. So, step one, we sought professional advice. We did our homework. The great thing about MDRT is that all that information is in people's heads, running around the network. So, step two is you bought 22% of Essential Planning.

00:03:45:17 - 00:04:05:28

You financed that on your own by taking a loan through the bank. Step three is, we should have that amortized and paid off in five years if we're tracking properly. So, the loan will be paid off and boom, we go right back to the bank again. You buy 29% more of Essential Planning and then it's like rinse, wash and repeat.

00:04:06:12 - 00:04:36:14

We go another five years. At the end of five years, I'll be pushing 70, and then you'll buy the final balance. I'll sort of move to emeritus, and you'll be 100% owner of the Essential Planning. That's the plan.

One of the issues that we faced early on in the succession plan and this multigenerational setup that we have is our employees, our team.

00:05:45:14 - 00:06:07:16

So, tell us how we broke the news of the succession plan to our clients. We sought professional advice, went to our crew at MDRT and asked how other people had done it. You know, the answer to the question is we communicated early and often.

00:06:08:06 - 00:06:32:04

I know you know it's a worry for me. And the reason announcing your coming on board and the succession plan to our clients was such a worry is because over the years I've taken over so much business from people who tried to make a similar transition. And it didn't work. They liked working with the guy. And then when the son came in or the daughter, it just wasn't the same.

00:06:32:18 - 00:06:56:22

So, I think we did a great job with the announcements you were coming. Basically, a full-on marketing campaign to plant that seed. And to this day, all these years afterward, at every interview, in every client meeting, I make a concerted effort to say, “Oh, Hunter's doing this. Hunter's doing that” to get you into the meeting, into the client relationship.

00:06:56:22 - 00:07:19:23

But I think one of the most effective things that we've done is recent and that is letting the client know that, sure, you're aware of the succession plan, but this is also a disaster plan. So that if I tip over, they won’t miss a beat. So, one of the ways that we've introduced you to the families that we work with is saying that we have the data.

00:07:19:24 - 00:07:44:07

We've got the account numbers, we've got everything, we've got the financial plan, we've got that stuff locked. But what we don't have is the in-between-the-line stuff, the personal issues, the emotional ones. It’s probably the most important stuff, the touchy-feely things because that's all in my head. So, bringing you into the meetings has been a way for us to get that out of my head and into your head.

00:07:44:07 - 00:08:08:13

Who are these people? This business is all about knowing your client. Who they are, where they're coming from, where they've been and where they're going. And I think organizationally that's been tough because I've got all that information right here. And we've been using that transition of information as a way to be able to get in front of clients on a regular and consistent basis.

00:08:08:25 - 00:08:32:09

So, when you're telling our clients about the succession plan, what's the first thing you're bringing up? You know, the first thing that I'm bringing up is that it isn't an imminent retirement plan. It’s a bona fide succession plan that we envision taking a decade or more to execute. All the information as far as systems, portfolios, stocks, bonds, mutual funds, ETFs, financial planning.

00:08:32:16 - 00:08:50:29

You've got to be up to speed or better, but it's going to take a while. The first message was it's not going to happen overnight. And the way that we framed that to the clients, I think, was effective. As I get fatter and grayer, everybody's asking me, “How long are you going to be around?”

00:08:51:16 - 00:09:17:02

And here's the plan. So, at every client meeting, we legitimately have on the agenda our succession plan. There are a lot of things on the agenda: technology, cash flow. At the end of the discussion, we have that little talk about where we are in the succession plan, reassuring them that it's not going to happen overnight, and it isn't going to happen until you're ready. And that we also have plenty of plans in place

00:09:17:02 - 00:09:39:05

if I didn't make it that long, like any responsible business owner would. That's right. So, we've talked a lot about the succession plan, and we've talked a lot about multigenerational businesses in the financial services industry, how we've set it up. When you first started to think about coming into the industry and thought about working with me, how do you envision it being set up?

00:09:39:05 - 00:10:05:01

What was important to you in jumping on that opportunity? I think it's the relationship with the clients. I want to make sure that they're my friends. I want to know everything about them. I want to know where they're going, where they've been, who their kids are, how many grandchildren they have, dogs, cats, everything. And I think a lot of that is in your head and in your notes, which no one in the office can read.

00:10:05:02 - 00:10:29:14

But, so, it's about transferring that information and making sure I'm prepared. And I know each of our clients as well as I can. And I want this business to feel like it's mine. And it wasn't given to me on a silver platter. That I put the blood, the sweat, the tears into it and made it what it is in the future.

00:10:29:23 - 00:10:56:00

The fact that you're earning it is really important to me, not just because I'm your parent, but because you have siblings. They need to know this was fair and businesslike. It's just not an entitlement. So, how do you think we're doing with your siblings? You've got a brother and two sisters, and they're all at different stations in life, really.

00:10:56:00 - 00:11:24:04

Do you think that that's going OK? Do you think that that's been well communicated? Is there anything that you would have done differently? I think it's going well. I've got a good relationship with my siblings, and that makes the difference, really. It does. So, we can talk about it openly, talk about it at the dinner table and they're on board, and they've reconfirmed that they're not interested. But they know if they did show interest, that we'd welcome them.

00:11:24:09 - 00:11:55:18

So, I think they know that. And I think it makes this whole process easier, and we can be transparent about it all. Communication is the key. That's true. You know, I know a big part of our process and again, I'll thank the Round Table and professionals that we hired to help us do this in a businesslike fashion, was family meetings. Talking to everybody, sitting everybody down at the same table to make sure that we could nip any opportunity for friction in the bud.

00:11:55:18 - 00:12:15:27

And I'm thrilled to hear that you speak to your siblings about it. Can you share with me what some of those conversations have been like? Absolutely. They're our family. And I think if they ever want to be a part of this, that the door is open. So, you know, sometimes I think my brother might join us in a marketing position.

00:12:15:27 - 00:12:35:21

They're just not interested. You know, maybe they will be down the road, but they know, the door is always open and we can talk about it. That's the best thing. I think if they had the thought cross their mind that they would say something to me, to you, to mom, to the other siblings. And that helps a lot.

00:12:36:07 - 00:12:53:13

Sure does. So, I like our setup, I like working with my dad. What is it like working with your son? It's great. I think we've come a lot further than I had anticipated. I guess what I'm trying to say is it feels like we have a lot of unfinished work at the end of every day.

00:12:53:25 - 00:13:12:23

But I think most professions are like that. You just have to shut it off at some point. It’s definitely a breath of energy for me. You know, it re-energized my interest in business and the processes and making sure that everybody’s going to be OK. All these wonderful families that we work for are going to be OK.

00:13:13:13 – 00:13:34:27

The one thing that’s tough for me is it is a difficult business, and you get your nose bloodied up a lot. I know I have. It doesn't go away. I mean, I had somebody here ask me the other day, “After 25 years, will I be OK?” And I could tell she’s running hard, and she's finding all kinds of hurdles to go over.

00:13:34:27 - 00:13:55:08

It doesn't go away. So, I'm not looking forward as a parent to the business or capitalism and especially this business throwing you your punches and having to witness that. I think you'll be fine. I think you'll take it great. But nobody wants to watch their kid get the crap beaten out of them. And I'm going to have a front-row seat to that.

00:13:55:13 - 00:14:24:02

And I am not looking forward to that. And what's important to me and what's No. 1 to me is the same thing that always has been. I want my son to know heart to hand, hand to heart that everything was done with integrity. That his father acted with integrity. There are a lot of opportunities to do the right thing but go just a little off the straight and narrow every day, every hour you're faced with those decisions.

00:14:24:15 - 00:14:54:05

And I'd like to leave knowing that you knew I always did the right thing. Well, that was a lot of fun. And I have to say, shooting this video, MDRT works in mysterious ways. I'm confident that Hunter and I learned more from this than anybody else will. But we still, on behalf of Hunter, he and I would like to give you the wish that there are a couple of ideas in here that you can implement or just to transfer the energy to get working on your succession plan.

00:14:54:05 - 00:14:59:07

And we wish you all the best in your multigenerational family businesses. Thank you.

Transcript

Succession planning for a multigenerational business

Author(s):

Andrew C. Lord, CLU, ChFC

Hunter Charles Thomas Lord, CFP