Founder ‘excited’ by daughter’s interest in the business

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With a succession plan that evolved over the span of a decade, daughter-father team, Kate and Joe Pal, of Toronto-based Pal Insurance Services Ltd., have developed a professional atmosphere based on pride and loyalty, but also on a willingness to listen to each other.

Here they share how, despite some bumps along the way, resilience and a desire to communicate effectively have allowed their unique succession story to flourish.

Tell us a bit about Pal Insurance, and how it came to be established.

Joe Pal, executive chairman, Pal Insurance: “I started in the insurance business in 1976 working in a career agency regional office with a major life insurance company. This decision came as a surprise to many of my classmates from the business school who became accountants or lawyers or decided to join large public companies.

I had always wanted to have my own business, however I had no real capital or good ideas. I was introduced by a friend to the potential opportunities for self-employment in the insurance industry. The industry was quite different at that time. Insurance didn’t have much visibility as an asset class and most of the benefits that it provides in an integrated estate plan were not widely understood.

I was fortunate to have a wonderful mentor by the name of Ralph Simmons. He explained the industry opportunities available by sticking to the basics of simply making calls, meeting people and following a continual learning curve. His motto was ‘knowledge is power’ and I worked hard following his advice.

Pal insurance as a company was started in 1985 and is an independent organization. Insurance products and various designs can be complex to understand. We were one of the first organizations in the country to have internal actuarial expertise to attend client meetings and educate their advisers on product design to ensure they properly understood the various options available in the marketplace.

Insurance has been a misunderstood asset class historically. In more recent years, there’s been a greater acceptance and understanding of the tax benefits and risk mitigation opportunities insurance provides in a properly designed planning program.

Time has a way of changing things and over the years it became more apparent to both the public and their advisers that there was tremendous opportunity using insurance products and services to assist them with their estate and tax planning.

In more recent years, the banks and other financial organizations have raised the awareness of the public of the planning benefits available in this sector.”

During those early days, how did you, Kate, experience life as an observer within a family enterprise?

Kate Pal, president and estate planning advisor, Pal Insurance: “When I was a kid, I remember my dad working hard and also being around for us when we needed him. He would leave for work early in the morning but be home for dinner, and would work from home in the evenings. In my early years he had a small team: himself and two others. Over time, the team grew. I remember helping him move offices downtown one weekend and thinking his office was a big place.

Over time, I grew an appreciation for the type of work he did. I noticed that he knew a lot of people and that people valued the service he provided them, his expertise, and his guidance with their estate planning. I saw the way he appreciated the team he built around him and remember him telling me that in our industry we don’t need to buy heavy equipment and machinery but instead we invest in being knowledgeable and having a strong, smart team who are the best at what they do.”

What have the roles of family members been within the business over the years?

Kate: “My mom has never had a formal role in our insurance practice, but I would say she has played a big role in Pal Insurance. She grew up in an entrepreneurial family and is a business and relationship minded person. She gets the big picture and has impacted and continues to impact our business positively in many ways. I also have a sister and a brother. My brother works with our VP Finance on overseeing some investments and is very happy with that. My sister lives in the U.S. and, although I wish she’d open our U.S. office, she has other passions and interest.”

Joe: “We have three children. Kate is the successor and team leader. … My son also works in both the business development and investment areas of our business. My youngest daughter lives in the western U.S. and is not actively involved in the operating business and helps in other areas.”

When did you, Kate, decide to become part of the business?

Kate: “After university, I worked overseas for six years in the finance side of emerging markets. I started in Europe and Latin America and then lived in West Africa working for a private equity fund there.

In 2010 I was looking to make a move to East Africa and had started dating my now-husband, who was living in London. I came home for a summer holiday and my dad shared that he was starting to work on his succession plan and asked if I would be interested in learning what his business was all about.

I did not want to wake up one day and wonder how my life might have been different so I decided to give it a try, knowing that I could always go back to Africa.

When I got into the business, I focused on learning all the ins and outs of the Canadian life insurance market and earning all my relevant designations. I quickly realized that the business is also in large part about getting to know people, their objectives, earning their trust and helping them implement planning that meets those objectives. I love people and fell in love with the opportunity to get to know all kinds of inspiring and smart people, earn their trust and give them peace of mind as it relates to their estate planning.”

How was it for you, Joe, to see your daughter take an interest in the business, and what did you experience in your succession plan with her?

Joe: “It was wonderful for me to see that Kate actually had an interest in our insurance practice. I was very excited and optimistic about the possibility she would have an interest in working with us.

She had spent several years overseas with a development bank in the Netherlands, focusing on business opportunities in South America. This was followed by a few years with a U.K.-based firm in the private equity sector where she lived in Sierra Leone, West Africa, working in the private sector.

As a founder, it’s very difficult to select who you feel will be the appropriate successor. There are so many factors involved in this decision. I knew she was qualified and, just as importantly, I knew she had a great work ethic and a wonderful value system that would fit into the culture we have worked so long and hard to build both for our team and for the families that have put their trust and confidence with us in this area of their planning.

Finding a successor with a combination of these qualities is rare. We feel very fortunate this has worked out well for both our clients and team.

Kate and I had never really talked about working together until she decided to return home and was contemplating career alternatives.

I think we’ve done a good job separating our father-daughter relationship with our working relationship. Although difficult at times, we try to not mix business with family time.”

How have you both overcome challenges along the way in terms of the focus or progression of the company as the leadership roles between you have changed?

Kate: “We had some bumpy roads in the beginning but always treated each other with mutual kindness and respect. Open and honest communication has been our best tool, even though it is not always the easiest path.

We have learned first-hand that proper succession planning takes time for those who are lucky enough to have that opportunity. As the years went by and I earned my stripes in our business, I gained the confidence to express my opinions and vision for the business. We have learned to agree to disagree sometimes and to be comfortable with that.

I have reached a stage now where I know Joe trusts my judgment and decision making and trusts in my vision. I still often seek his opinion on important matters, although he knows that ultimately, I make my own decisions and trust my instincts.”

Joe: “There has been a natural evolution of the role change in the business, with Kate wanting to take over as president and CEO and my role evolving as chairman.”

Have you found professional advisers of any kind to be useful in your succession experience, and, if so, would you encourage other family enterprises to engage with such advisers?

Kate: “Absolutely. Professional advisors have helped us a lot. The key is to work with advisors who we both like and trust. The right advisor can be a great objective ear or voice. Having a seasoned advisor who is also an expert in their respective area also allows us to benefit from the richness of their experiences and learnings with other clients. The right advisor can be a great thinking partner and a buffer for difficult conversations.

I would encourage other family enterprises to seek out the assistance of professional specialized advisors as well. The key is for both sides to trust and respect the advisor.”

Joe: “The role of a strong professional advisory team is crucial to any business. We learn from their respective areas of expertise. We work with our clients’ advisors regularly on a collaborative basis to help understand the clients’ wants and needs.

Over the past 45 years, we have worked to create a business that provides sound and reliable advice. We have been fortunate to have a strong core team of knowledgeable people that have been together for well over 30 years. This team are now mentoring the next generation for the future by sharing their experience.

Our succession plan began over 10 years ago, and we now have a strong nucleus of Next Gen team members who have been carefully mentored to understand both the hard and soft facts of the planning-decisions process. This knowledge transfer takes time to do properly. We are very pleased with how this information and our processes have been transferred.

Our own advisers have also provided us with a solid roadmap to ensure we follow best practices in our objective to ensure a smooth and seamless succession plan.

Not surprisingly our clients and their advisers have expressed appreciation on the fact we have addressed our own succession to provide them and their families with the reassurance we have built a strong team that is well prepared to provide continued support and advice.”

How do you maintain the work-family balance in your relationship now?

Kate: “It is always a challenge. We try to set aside a half day monthly and a few full days annually to work on big-picture planning and non-client related things that we don’t have time for in our day-to-day lives. This helps us to keep our family time as family time when we spend time together outside of the office. I have three busy young kids as well, so that helps, too. They don’t let us get caught up in work talk for very long!”

Joe: “Work-life balance is difficult for any entrepreneur or business owner who loves what they do. It’s important to book time away to help create a proper perspective on the work-life balance you are always trying to achieve.”

Responses have been lightly edited for clarity and length.

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