Managing Brokers: Planning Your Succession Plan
Whether you’ve been in the business for 5, 15 or 50 years, every managing broker needs a succession plan. A clear plan that identifies a qualified licensee who can manage your brokerage when it’s time for you to step away from the business, or in case of a sudden emergency, makes good business sense. A written succession plan outlining how and when a new leader can take charge will reduce the chances of interruption in the brokerage’s licensing, and ensure that your clients’ best interests are protected.
By developing a succession plan so that there is a qualified managing broker or associate broker ready to step in when needed, you won’t have to worry about whether the licensees in your brokerage will be able to continue working should you need to leave unexpectedly or through a planned retirement. You’ll have assurance that the business of the brokerage can carry on without interruption, overseen by a capable managing broker (or brokers) familiar with the brokerage’s practices and procedures, and licensed in all the necessary categories.
A succession plan is also an important part of protecting the public. The role of the managing broker is crucial to ensuring that the brokerage carries out it duties under the Real Estate Services Act (RESA). A managing broker is expected to be in active charge of the brokerage, to ensure that the business of the brokerage is carried out competently and that licensees and employees at the brokerage are adequately supervised. That includes ensuring that trust accounts and records are properly maintained, and that there is appropriate management and control of documents.
Succession planning is becoming increasingly important for many brokerages across BC. According to the Council’s licensing records, managing brokers over the age of 50 are currently managing 79% of all the province’s licensees. In fact, 46% of licensees are supervised by managing brokers over the age of 60.
When building your succession plan, here are a few points to keep in mind:
- A managing broker is essential. Under section 6 of the RESA, a brokerage must have a managing broker, and can only provide the categories of real estate services for which the managing broker is licensed. That means a managing broker licensed to provide trading services and rental property management services cannot manage a strata brokerage.
- Are there internal candidates? As you train and mentor the licensees at your brokerage, you can assess their potential to fill the role of managing broker. Develop a list of key qualifications that a new managing broker at your brokerage would need. Encourage promising licensees to pursue the qualifications to become an associate or managing broker.
- Do they know the brokerage history? A new managing broker should review the brokerage’s books and records for previous years, to ensure that the brokerage has been in compliance with all the requirements of the RESA, Rules and the Council’s guidelines for record-keeping.
- Document short-term delegation. As a managing broker, you may periodically delegate responsibilities to another experienced licensee, preferably an associate broker — for example, as vacation coverage. When delegating tasks, make sure the agreed-upon responsibilities are clearly outlined in a written document, specifying the individual who has accepted the responsibilities, and the start and end date of the delegation. Let licensees at the brokerage know who has taken on your duties in your absence, and inform the Council as far in advance as possible of your planned absence. And remember — even when tasks are delegated, the control and conduct of the brokerage’s business remains the ultimate responsibility of the managing broker. For more information, see Delegation in the Brokerage Standards Manual.
- When you step down, will there be other changes? As well as a managing broker, are you also a partner, director or officer of the brokerage? Section 2-22 of the Rules requires brokerages to promptly notify the Council in writing of brokerage business changes, such as changes in partners, directors or officers.
- Do you own the business? If you are the sole director of the brokerage, as well as the managing broker, there are additional considerations you should keep in mind when planning for the future. Have you made arrangements to enable the business to continue should you become ill, incapacitated or deceased?
- Keep the plan current. Review your succession plan periodically, to ensure that the strategy you’ve outlined is still appropriate.