Ross Richey has more than tripled his agency’s revenue, acquired three other firms and added a new location complete with a $1.5 million renovation—all before his 30th birthday.
As the largest generation in history—more than 80 million strong—millennials aren’t an emerging trend or buzzword. They’re already here. And some, like Richey, are business owners making an impact where they live and work.
Richey was only 25 years old when he purchased Lawton Insurance in Central City, Ky. A family business since 1899, Lawton Insurance has been a model of perpetuation, with strong growth since Richey took over in September 2009. The principal with enough foresight—and some would say guts—to entrust his family’s agency to a rookie? Bill Greenwood.
Along with his father-in-law Bob Lawton, Greenwood took a measured chance, delivering a family business that had been in existence for more than a century to a new generation—one that was not only much younger, but also outside the family line. The result? Tremendous growth and rewards shared across the generations.
“The best thing I ever did, at age 65, was to sell out to Ross,” Greenwood says. “I got to keep an office and my finger in the business, but I stopped being trapped in the management of the agency. And my wife and I have been able to enjoy our golden years.”
Even Lawton, at age 93, still ventures into the office, but on his own terms.
Last to Leave
The word “flexibility” is often associated with millennials. This is a group that understands how to work hard—they know there’s a definite payoff for those willing to invest the effort—but also values options and work-life balance. “I do some of my best work later in the day,” explains Richey. “So I may not always be the first one at my desk each day, but it’s not uncommon for me to be one of the last to leave.”
In fact, millennials are not much different from previous generations—they’re just better equipped to manage flexibility through technology. And that’s an advantage not initially available when older workers were just starting out. According to a global generational study completed by the University of Southern California, London Business School and PwC, it turns out that non-millennial employees value workplace flexibility in equal measure and are even willing to forego pay and delay promotions to get it.
“I think understanding the individual dynamics of how each person prefers to work—and that those work habits don’t always match the ‘traditional’ office—is a real strength of leaders my age,” Richey says. “It’s about getting results, not doing things a certain way because that’s how they’ve always been done.”
Millennials also are known for their emphasis on teamwork and sense of community. Richey reflects this inclusive approach and understands an agency’s potential positive impact—not only on the lives of its employees, but also on its neighbors.
“As a result of the opportunity given to me, Lawton’s 115-year history continues under independent ownership,” Richey says. “The people who have spent their entire life working in a small community have a place to build a rewarding career. The family wasn’t forced to sell out to some out-of-town big city broker, one that would abandon the local Main Street presence, eventually transferring all our customers to a service center a thousand miles from Kentucky and firing all the employees who had helped us grow and prosper.”
The groundwork for the change began years earlier when Greenwood first met an 18-year-old Richey. Greenwood saw potential and began grooming the new leader, and after Richey joined the agency, outside help contributed to designing more formal perpetuation plans.
“We were very deliberate,” Richey says. “It was very much a group effort to not only plan for but execute a smooth leadership transition. Even though some roles have changed since I purchased Lawton, having the family remain engaged has been invaluable.”
What has fueled Lawton’s growth? From Richey’s perspective, three key factors determine the future of any independent agency:
- Computers, both online and in the cloud. “That’s simply a requirement in today’s business world,” Richey says.
- Recruiting and training tech-savvy young employees. “They’re certainly not intimidated by technology—they’ve grown up with it,” Richey explains. “But don’t assume that makes them automatic experts. Exposing them to industry leaders and keeping them engaged through industry organizations that have other people their own age is important to their long-term satisfaction.”
- Access to an array of insurance carriers. “You have to have the business partners in place to remain competitive,” Richey says.
Richey has worked hard to make sure Lawton has all three components in place and believes when any firm does, it’s easier for older agency owners to retire on their own terms.
“The fact that I could mold an insurance career into my own, that there was no ceiling on possibilities—that’s what attracted me to the industry initially,” he says. “I think that’s appealing to so many talented people who we should be recruiting. At any small agency, it’s important to network and to get younger employees, who might be somewhat isolated in an office, exposed to all the opportunities available in insurance. This is a great industry and generations on both ends of the spectrum can work together to make it even better.”
Amy Skidmore is an IA contributor.
SIDEBAR: What’s Your Exit Plan?
An agency succession plan offers you options, according to Bob Pettinicchi, executive vice president and chief lending officer at InsurBanc. How can you implement a plan that will meet your needs?
Create a structured perpetuation. “Instead of hanging on only to sell out, a structured perpetuation plan lets owners control their own destiny,” Pettinicchi says. “It’s about having choices and getting to run your business with the goal of enhancing value over time. That value can come through careful grooming of producers, new markets, added specialization and a deliberate sales culture.”
Share your plan. “If the owner knows his or her intentions but the employees don’t, that’s a problem,” Pettinicchi says. “I’ve seen instances when the ‘potential buyer’ didn’t even know they were considered next in line, and owners seemed shocked when they left the firm.”
Don’t procrastinate. Pettinicchi emphasizes that a good perpetuation plan takes several years to execute. “It’s usually tough for just one younger leader to buy out an older owner with a career’s worth of equity,” he says. “It’s a good idea to have multiple owner candidates in place.”
Allowing sufficient time also ensures buyers are ready to make a down payment when the opportunity arises. “The existing owner needs to make sure their buyers are financially enabled,” Pettinicchi explains. “There are as many financing scenarios as there are agencies, and I’ve seen a lot of creative solutions—deferred compensation, phantom stock. It’s obviously not a detail you can overlook until the end. While in the past, sellers needed to finance much of the transition, the availability of specialty lenders allows the seller to receive significant cash up front, which reduces their risk of selling to an inside party.”
Plan for the leadership transfer. Both buyer and seller need to consider transition time. For a successful transfer of leadership, the former owner should remain engaged, not only leading up to the sale, but also after—just like the scenario that played out at Lawton Insurance.
“You may hear a lot of talk on the golf course from agency owners who sold out to a big public broker, saying that they sold out for X or got Y,” Pettinicchi says. “But what you don’t hear are the details of the transaction. Sometimes it’s not as big of a payday as it sounds. The best part of a successful perpetuation plan is that you’re not only rewarded financially—it actually feels better. You know the firm you built over a career continues. Your employees remain in place, and you’ve handpicked a buyer with a vision you can embrace. That’s a pretty great way to hand over the reins.” —A.S.