Al G. Brown & Associates, a Toronto-based insurance and financial firm founded in 1943, rallied and managed its succession strategy after an unexpected death. From left: managing partner Elli Schochet, the late Al G. Brown (front) and David Wm. Brown, and former partner Golda Brown, who's now a consultant with the firm.Supplied
This is the third and final instalment of a series about succession planning and acquiring books of business. Read the first article here and the second article here.
With a glut of financial advisors set to retire in the next decade, too many see planning for their future as something they’ll get to eventually. Just like many of their clients, procrastination and indecision rules the day.
Even for many advisors who have a plan in place, succession is seen strictly as their retirement plan. Few consider the worst-case scenario such as death or disability.
“We tell our clients all the time about what can happen if they don’t have a succession plan. But as advisors, we’re a bit hypocritical,” says Elli Schochet, managing partner and certified financial planner at Al G. Brown & Associates in Toronto. “We don’t think something tragic can happen to us.”
But something tragic did happen to Al G. Brown & Associates, a Toronto-based insurance and financial firm founded in 1943. In December, 2020, senior partner and advisor David Wm. Brown sent a note to clients about taking a few months off to recover from an illness. In February, 2021, he passed away at age 65. It was not expected. Suddenly David’s appointed successor, Mr. Schochet, was at the helm, with 3,000 clients and 17 staff members.
At the time, staff members were still reeling from the loss of firm founder and family patriarch Al G. Brown, who died in 2017 at age 97. Al G.’s son, David, served as Al’s successor for almost three decades but Al G. was still most happy consulting and connecting with clients when needed. He sold an insurance policy three days before he died, says Golda Brown, Al G.’s daughter and former partner at the firm. She’s now a consultant to the firm.
Heir apparent
Mr. Schochet, now 50, was tapped to be part of the Al G. Brown & Associates’ succession plan in 2010. He first crossed paths with David in the early 2000s at Million Dollar Roundtable (MDRT) events. David, a Jewish community leader and philanthropist, was an icon in insurance circles.
“We knew each other through the community but not well at all,” Mr. Schochet says. They spent time together at MDRT and Al invited him to the office to spend time with the Browns.
Mr. Schochet had his own practice with ESP Financial for 13 years and, like the Browns, primarily helped professional and business-owner clients with risk management, wealth transfer and tax strategies using insurance.
Finding the right successor was key for the Browns. The firm received an acquisition offer that David rejected due to fears that clients and staff wouldn’t receive the type of service they were accustomed to.
“The most important factors to my father, David and me were ethics, honesty and that the successor would really care about the clients,” Golda says.
“[Mr. Schochet’s] morality represented our morality. Our name has been around 80 years and it had to be somebody with those qualities.”
When Mr. Schochet joined the firm in 2012, the Browns took a multi-faceted approach. As Mr. Schochet explains, “we needed to date before we could get married. The real opportunity was to learn from a legend in the business – not only from the insurance knowledge but also in working in an established multi-generational family business.”
Mr. Schochet brought his clients to the firm, and Al G. Brown clients were informed when he joined. But there was no public knowledge that he was part of David’s succession plan.
Behind the scenes, David and Mr. Schochet consulted with a succession planning expert for more than a year to iron out the details. A legal agreement was created that explained the working arrangement, the progressive stages as Mr. Schochet evolved at the firm and, of course, a clause about what would happen if their plans didn’t work out.
By 2016, Mr. Schochet entered into a full partnership arrangement with David. Mr. Schochet had put the time in and understood that he needed to pay his dues, something beginning and mid-tier advisors don’t always understand, he says.
“It takes about five years to pick a successor,” he says. “Succession planning doesn’t mean you walk out and retire. It means you have someone in your business who you work with and grow so you can pass the mantle – but it takes time.”
Specifically, time to learn the firm culture and client dynamics. But on the client front, David and Golda were slow to introduce Mr. Schochet to them. In hindsight, Golda says they needed to move quicker to make a connection.
“It was hard for David and me to feel that we could let go of some of our clients,” she says. “They were second- and third-generation clients in our firm. We knew a lot about them. They were divulging things in their lives that they weren’t telling anyone else and didn’t necessarily want it shared.”
She and David believed they had lots of time to ease Mr. Schochet into client files.
Grief and determination
Soon after David’s sudden passing, Golda had a nagging thought alongside her grief. “I can’t lose this company or I’ll be letting David and my father down.”
She made it her mission to help Mr. Schochet and the team ensure clients felt comfortable with him as successor. At that point, some clients still hadn’t met him.
The task was enormous under difficult circumstances – due to the COVID-19 pandemic, everyone was working remotely, which meant much time on the phone and video calls.
“They didn’t know Elli,” Golda says of Mr. Schochet, “but they knew me and trusted me. I made sure to tell people that David would have never chosen Elli and my dad and I would never have agreed to it if we didn’t think he was going to be tops.”
During his first 100 days at the helm, Mr. Schochet spoke with as many clients as he could. The team also sent e-mail blasts, comfort letters and a newsletter.
The result? Clients felt comforted and they only lost one client.
Mr. Schochet credits the entire Al G. Brown team for their dedication to keeping the firm going during a period of personal grief.
“Clients had such a deep relationship with David for 40 years. They needed to be comforted and understand that all the planning they had done with David was still going to come to fruition,” he says.
David’s daughter Sarah Brown (centre), pictured with Golda Brown and Elli Schochet, is now a partner at the firm.Supplied
Planning the next succession
Now firmly at the helm, Mr. Schochet must consider his own succession plan. He and Sarah Brown, David’s daughter, are the firm’s two partners. Sarah, now 35, joined the firm the year before Mr. Schochet and has held many roles. Now, in addition to partner duties, she concentrates on client development.
“I don’t think I ever felt like it had to be kept in the family,” Sarah says about Mr. Schochet as successor. “Anytime somebody new comes in, they bring their unique ideas and background.”
In terms of who’s next, Mr. Schochet notes they’re still coming up for air from David’s passing.
“It’s definitely challenging. It takes time to find the right person,” he says.
Given the firm’s growth trajectory, he hired specialists in areas that needed improvement, including a director of wealth management. He also brought in more staff to work on group benefits, life insurance and estate planning. He also hired an actuary.
Mr. Schochet says the succession saga at Al G. Brown & Associates is a cautionary tale for advisors. While the outcome was positive, he says he shudders to think what would have happened if there was no one at the helm. “Eighty years could have disappeared very quickly.”
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