A comprehensive and well-thought succession plan saved my business when I suffered a medical emergency. While there were no explicit provisions in the succession plan that covered such things, all the components of the process worked to provide my firm’s clients continuity of service while I was incapacitated in the hospital.
I hope my story will change the way you think about succession planning. If this is something you have been meaning to do, but never get around to doing, I urge you to take action now.
Over my career, I have built a firm that now employs three advisers, plus support staff, and provides clients with a comprehensive and diverse mix of services including financial planning, life insurance, health insurance, employee benefits, and asset management. I have worked in the financial services industry with Penn Mutual for more than 44 years, earning several of the company’s top awards along the way, including Financial Services Professional of the Year (2003) and the Blue Chip Award of Hornor, Townsend & Kent (2013).
On September 19, 2016, I checked into a hospital for elective throat surgery, expecting to stay one night for observation afterwards. However, the next day, tests revealed a serious complication, a life-threatening infection of my esophagus and chest. My blood pressure soared to 217, I was rushed into emergency surgery, and later placed on a respirator. Over the next two months, I would undergo four more surgeries and 32 days of hospitalization, followed by 10 days of rehabilitation, before all danger passed and I was given a clean bill of health to return to work.
Before this experience, I was in good health and had never been admitted to a hospital in my life. Then, without warning, I was lying flat on my back in a hospital with tubes running through my body. For most of my stay in the hospital, I was incoherent and incapacitated. I couldn’t even give instructions to my staff.
SUCCESSION PLANNING IS A CONTINUOUS PROCESS
Ongoing service is a critical component of my company’s client value proposition. Our firm supervises 200 investment accounts, including quarterly client reviews, periodic portfolio rebalancing, and timely transfers of account balances to meet income needs. Fortunately, 15 years before the emergency, I had begun developing a comprehensive succession plan to assure that my clients’ needs would be met in such a situation.
Todd Jakubik had joined Penn Mutual as an adviser in 2001, his first job after graduating from Monmouth University with a degree in Finance. His strong work habits impressed me, so I began introducing my clients to Todd and then sharing cases with him.
In 2006, Todd and I created a formal partnership with a one-way buy-sell agreement, in which Todd agreed to acquire my book at a specified price in the event of death or retirement.
THE KEYS TO SURVIVING AN EMERGENCY
After much reflection, I am pleased to share what I believe are the three keys that enabled my firm to maintain client services, and also the firm’s business value, through my medical emergency:
1. Information sharing: There are no secrets among people who work in our firm. Any time we meet with clients, we make copious notes in a file, so that everyone on our staff can know our current strategies and activities for a client. These detailed files were critical for helping Todd maintain service to my clients through the emergency. They also helped him manage his workload during a time when his schedule of client reviews doubled to as many as 20 meetings per week.
2. Staff reinforcement: Other members of our staff also pitched in with extra time and effort. They included financial adviser Peter Bruckmann, who advises our employee benefits and health insurance clients; Administrative Assistant Diane Lanigan; and Douglas Grant, an adviser who we recently hired. The most significant element here was that, over the years, Todd had been introduced to most of my clients, who found comfort that a familiar face was stepping in for me.
3. Time: Time is one of the most important dimensions to successful succession planning, and procrastination is the biggest obstacle to effective succession planning. Todd and I worked on refining a business succession plan over more than 15 years, and I’m glad we took the steps to update our plan in 2015.
THE TIME TO BEGIN PLANNING IS NOW
You may think there is a market to buy your business, but without planning, that market probably won’t be there when you need it. You must create the market, and you can do that in many ways—with a younger associate, family member, key employee or even a competitor with the same philosophy. Just recognize that it will take hard work and time to get it right.
If 44 years of working in this business has taught me anything, it’s that the longer you are in business, the closer your clients will feel to you, and the more they will depend on you—and be disappointed if you are not there to help them.
If you experience an emergency, like I did, the same planning can help your company continue operating. That’s a lot better than losing your best clients and all their goodwill at the worst possible time.
I am happy to report I am in great health and back in the office at the helm of my business.
Bob Tuzzo, President, Total Financial Concepts
Thank you to the Penn Mutual Life Insurance Company for telling my story and for allowing Total Financial Concepts to share a few tips on succession planning with financial advisors & business owners everywhere. Penn Mutual has given permission for us to re-publish this article on our blog.