I play racquetball regularly with a group of “aging” attorneys and insurance agents, most of whom are knocking on the door of retirement. I asked them one day, before jumping into the court, “What’s your succession plan?” The group all looked at the floor and muttered, “Don’t have one.”
A year ago, our attorney fell on ice and nearly died from surgery complications. After he returned to work, thankfully, I asked him, “Who’s your backup?” He confessed he didn’t really have one. He has served our needs well for decades, but I realized we would be in a pickle if his institutional knowledge and familiarity with our business was gone tomorrow. I concluded it’s our responsibility to seek out a successor, not his.
In rural communities, it can be a challenge for farmers to find good continuity and succession for their professional advisory team members. Reflect on your current team of professional advisers: accountant, attorney, insurance agent, wealth products adviser, banker, crop scout, nutritionist, family business consultant, etc.
Scrutinize your team with the following questions:
- How old is your primary provider?
- Is there someone with bench strength in the business who is knowledgeable about your operation and can step in if the primary contact is gone?
- Does your primary provider involve backup team members when engaging with you to build familiarity with your business?
- Do your advisers play well with other advisers serving your needs?
- How is your adviser growing and developing skill sets to keep up with the increasing complexity of issues you face in your business?
- Is your provider going at it alone or networking with other professionals with unique talents or services?
How do you find a successor adviser if none exist in the firm you’re working with? Clients and other consulting associates have suggested the following ideas:
- Inquire with your primary advisers about others in the profession they would recommend.
- Ask farming neighbors whom they use and what kind of experiences they’ve had.
- Interview prospective successor professionals to inquire if they’re taking on new clients. Ask them what they charge and how they would go about acquiring the institutional knowledge necessary to effectively serve your needs.
If you’re working in an operation with multiple generations, another dimension to consider is what talent is necessary to serve the needs of your operation’s successors. Are the needs in your business changing as you grow, diversify or become more complex in operating structure? Your current advisers might have been a good fit for you, but maybe your successors need to explore alternatives they’re more comfortable with rather than you picking one for them.
Don’t wait until you experience a crisis with a key adviser to consider where you’d turn for help. Engage your advisers with candor about this and make sure you have a succession plan in each area of expertise critical to your business.
To aid farmers in each step of the succession planning process, the weekly Legacy Moment eNewsletter delivers tips on financial management, family harmony, tax and legal issues and leadership development. To sign up for it and other resources, visit www.FarmJournalLegacyProject.com