CHRIS MARSH PHOTOGRAPHY
As Colin R. Parkin, Dip FA, CeMap, was setting up his own financial services business, he was also planning his exit strategy.
Parkin had racked up more than 25 years in the insurance and financial services profession when he decided to go independent in 2000. He started with the end in mind.
When he looked at locations for his new business, Parkin, a 40-year MDRT member from Lincoln, England, opted to purchase rather than lease. The building itself would be part of the succession plan for Parkin and Julie, his wife and business partner.
“We bought office premises 10 times bigger than we needed,” he said. “It would generate rental income and then, as we grew, give us space to grow into.” The building would also provide capital when the time came to retire.
Now, 18 years after Parkin started his business, he has sold the building and moved into the implementation of his three-year succession plan.
Finding a successor
Parkin started in direct sales for a U.K.-based insurance company when he was 19. He worked his way up to general manager, with 60-plus offices and 750 agents working for him. After 19 years with them, he left to work for a German company and then a U.S. company based in England. However, he balked at the company’s request to relocate with his family to southeast Asia. Three days after declining the position, Parkin was let go.
“When you’re on a huge salary, you think, ‘What am I going to do now?’” Parkin said. “So I started a small office — me and my wife, with a couple of support staff.” Parkin spent six years tied to a company before becoming independent.
“When I became independent, that was when we really started thinking about succession planning,” he said. After purchasing the office premises, Parkin looked for his successor.
“We decided that when we’d take on advisors, we’d look for one with relevant skills to eventually take over the practice,” he said. “We discussed it right at the initial interview stage with my successor.”
But the succession plan got a little trickier as the time for retirement grew closer. When Parkin told his senior staff member he’d like him to take over when he retired in a few years, the successor told him, “That’s great, boss, but I’ll never be able to buy you out.”
“We’ll find a solution,” Parkin said.
The first step was to sell the office property, with a leaseback to continue using the building. Parkin sold it about a year ago and netted quite a bit of capital. He was also able to lease the space back for five years.
“So all my staff are secure and they have five years on a lease,” he said. “If they want to buy a different place after this, they’ll be able to do that.”
Planning the buyout
“Then I had to find a way to allow him to buy me out,” Parkin said. “I said, ‘We can develop a contract where I’ll contribute toward the cost of the office and salaries. You work with my clients and pay me the revenue stream. In three years' time, they become yours.”
To prepare, Parkin began introducing his clients to his paraplanners and other advisors. This process began before Parkin and his successor even signed a formal succession agreement.
“We planned for two years before we actually started the succession process. We planned what it would look like,” he said. “When forming legal contracts, it’s difficult. We had areas where we could compromise and areas that were deal-breakers. We negotiated them. It’s always been about finding the solution. But we’d been on a clear path from the beginning with our successor.”
The retired life
When it came time to consider exactly when to retire, one of the questions Parkin and his wife asked themselves was, “How much is enough?”
“We got to the point where we had enough and wanted to spend it, but you can’t spend it if you’re working all the time,” Parkin said. “We worked out what we needed. I already had far more, so I set up my own charitable foundation.”
Which leads to the next part of Parkin’s succession plan. “The last thing you want to do is stop and do nothing, otherwise you’ll just end up in a box somewhere,” he said. “You have to have something that keeps your mind active and gives you purpose.”
Parkin and his wife spent 18 months setting up a foundation to help people ages 16 to 25 who want to make something of their lives but don’t necessarily have parent support. “I want to try and make a difference,” he said. “If I can give them a head start, I’ll feel like I’ve done something.”
With two years left to go in his succession plan, Parkin only comes into the office a couple of times a week. That time will continue to decline as the succession plan continues, because Parkin and his wife also realized retirement was a chance to just enjoy themselves.
“We love our holidays,” he said. “And we love spending time with the grandkids. Now we’ve got time to do that whenever we want to.”