Agriculture is back on trend- let’s talk succession.
9 August 2019
Let's talk succession
Succession can be defined as, ‘a process by which individuals are scanned to pass on the leadership role within a company’. The process ensures that the business continues to operate efficiently without the presence of people who were once holding key positions as they must have retired or resigned for example.
‘Succession Planning’ is on trend at the moment, and simply the way I see it as a generalization agriculture as a whole industry is pretty good, some would say the best they have seen it. Protein markets are sizzling (excuse the pun!) wool & grain prices are well above the 10-year average & it is an exciting time to be in the heart of agriculture. Naturally when things are going well it is encouraging for those with an agricultural bent, people want to be in it, do it & let’s be honest if you are a farmer breath through it!
In the last five years I think we have seen a turnaround, those returning to the family farm or choosing careers in agriculture no longer declining. The conversations around succession planning are continuing to become more and more because people can see a viable future.
We think that is important to remember you don’t have to take the linear approach with succession. Say for example, you don’t have any children of your own or perhaps your children aren’t interested in taking on the family business, but you are not ready to just sell it up to who ever wants to pay the highest price. We find that most farmers who are having trouble letting things go on the farm are usually the most passionate, they have worked hard their whole life to have what they do now & they are usually people that want to pass on their knowledge to someone; and there are people actively looking for transition opportunities. Whether or not your succession plan will be the more traditional family style or choose a different transition opportunity the crucial elements to consider in this situation are very much the same.
What things should be considered when talking succession planning for all farming businesses:
- Identification of those to be involved & role definitions
- Property Identification & landholding specifics (owners, date of purchase ect)
- Identification and review of most suitable business structure & setup
- Responsibility & treatment of income & expenses
- Responsibility & treatment of profit or share dividends
- Decision making responsibility for purchasing capital requirements (equipment or land)
- Reporting & performance reviews
- Exit Strategy & requirements for this (termination)
We like to remind our clients when we undertake succession planning it’s not a one step process, we like to break it down into three key areas:
- Management &/or control transition
- Business ownership transition
- Asset & liability ownership transition
Each of these steps can be completed over a period of time, there is nothing to say that these thre areas to be completed at once, we normally recommend a three staged process as it allows for people to work through the transition gradually and to before comfortable with each stage.
Common Mistakes
Assumptions:
It’s often quite funny that people assume what other family members want and sometimes when you actually take the opportunity to listen to each person it may be different to what you thought- this is step one; get a clear understanding of what each individual involved actually wants. You may be surprised just because your siblings aren’t interested in the day to day running of the business, they may have an emotional attachment to the farm; they may not want their share of pie in cash if they realise the farm can’t survive that capital outlay- they may be happy as silent share holder.
It has to be Equal:
If you start with the idea that your succession plan should be equal amongst the successors things get difficult, we prefer to look at what is fair- has one person been involved in the family business for a longer period of time and given up other opportunities or taken a reduced income for a period of time?
Succession isn’t completed by one person:
Succession is a team approach- there so many different elements. Make sure that you are comfortable with the team you assemble. For example, we would recommend you include, an accountant, solicitor, bank manager, mediator. It is important for these purposes to not have someone that sits to ‘one-sided’ – get a team together that everyone is comfortable with not someone with an individual’s best interests at the centre. A good outcome is when everyone is a little unhappy; it means that things haven’t gone too much one person’s way.
Succession planning success is determined by setting a clearly defined mutual objective by those that are involved in the process at the beginning. It should be remembered that succession planning is a process not a job so works through each part of the process- don’t be in a rush. And remember a succession plan can be reviewed and so it should be as we know that circumstances change.
Looking to start the succession conversation, contact us
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Starting From Scratch - Week 3: Behavioural Finance Watch the video on this page or listen to the podcast on our website, on Spotify or on Apple Podcasts. Listen to the full episode on the FS360 podcast . In the first two weeks of this series we covered the technical side of investing: the different ways to invest (direct shares, ETFs and managed funds), then risk versus return and the main asset classes. This week is about the human side. Even with the right knowledge and a well-built portfolio, the thing that most often derails investors isn't a lack of information. It's emotion. That's what behavioural finance is about: understanding the psychological influences behind our decisions to buy, sell or sit still. And one of the biggest things a financial planner can do for a client is simply keep them in check when emotions start to drive their money decisions. So, what is a bias? A bias is a mental shortcut. It feels logical in the moment, but over time it can lead to poor decisions. Traditional investment theory assumes we're all perfectly rational. We're not. Even the share market itself can be an irrational place. Take a large company that reports earnings slightly below expectations. The share price can fall several percent on the day, even though the underlying value of the business hasn't really changed. Plenty of investors sell on emotion rather than on the numbers. Here are the biases that matter most for people just starting out. Loss aversion: why a 10% fall hurts more than a 10% gain feels good Most of us feel losses more strongly than gains of the same size. It traces back to our fight-or-flight wiring: our first instinct is to avoid danger, and only then to chase reward. In investing, that often shows up as selling during a downturn just to stop the discomfort. We've seen it through the dot-com crash, the GFC, COVID and more recent geopolitical shocks. The trouble is that selling can lock in the loss, and it often leads to risk aversion as well. Having been burnt once, people become reluctant to go near growth assets again. Over 30 years, the gap between someone who stays invested and someone who keeps stepping out of the market is stark. Every time you sell and re-enter, you interrupt the compounding that does the heavy lifting. Recency bias: assuming the recent past will continue This one comes up all the time, and it can apply to nearly anything. Over the past 20 years, the top-performing asset class has very rarely been the same two years running. Last year's winner is not a forecast. The fix is simple, if not always easy: zoom out. You're probably investing for decades, so look at a longer sample than the last year or two. Confirmation bias: finding the evidence we like Almost everyone is guilty of this one if they're honest. Once we've decided something is a good idea, we go looking for reasons to back ourselves up and quietly ignore anything that suggests otherwise. A good antidote is to throw rocks at your idea. Write a list of reasons why you shouldn't do it. If the idea still stands up, that's a good sign. If it crumbles, you've just avoided an expensive mistake. Overconfidence: when an easy win goes to our head Recency bias, confirmation bias and overconfidence are really two pages of the same book. An easy win (a property that rose in value, a share that took off) makes us feel skilled when the market may have done most of the work. We then repeat the approach, seek out information that supports it, and take on more risk than we should. The flip side matters too. Someone who's been burnt before can lose all confidence, and doing nothing can be just as risky as doing too much. Herd mentality and FOMO "Everyone's doing it. Everyone seems to be making money. I'd better jump in before I miss out." That's herd mentality feeding fear of missing out, and social media has turned the volume up. Afterpay and Bitcoin are good examples. Both delivered extraordinary growth for a time, and plenty of people jumped in simply because they were so popular. But the herd doesn't know your goals or your timeframe, and by the time something is everywhere in the news, the best of the growth may already be behind it. Blindly trusting what others are doing, without doing your own research, is arguably one of the riskiest things you can do. Biases aren't always the enemy One of the most useful things to understand is that these biases aren't always bad. Take someone with $80,000 sitting in the bank for a house deposit. Their loss aversion is working in their favour, because a 10% fall in a growth asset could leave them short at settlement. For money you'll need in a year or two, the bank account may be exactly the right place for it. This ties back to Week 2. The same person might hold a superannuation balance invested for growth over decades, while their house deposit sits in cash. Different timeframes call for different strategies. Which is why the most important question isn't what to invest in. It's what you're investing for. How to keep your biases in check There's no way to switch your biases off. We're all human. But you can limit the damage. Build awareness. If you don't know these biases exist, it's hard to do anything about them. Learning to recognise them is step one, ideally before you start investing. Understand the why. Knowing which bias is at play helps you pause before acting. Challenge your own idea. Write the "why shouldn't I?" list. Throw the rocks. Match the money to the goal. Be clear on your timeframe before you invest a dollar. Put some systems in place. Research, automate your investing and diversify so no single call can do too much damage. Get an independent sounding board. Someone with no emotional skin in the game will naturally play devil's advocate better than you can. The last piece of advice: get a second opinion. Even a third or a fourth. Why this matters when you're starting out When your balance is $30,000 or $40,000, a few poor decisions might not feel like a big deal. But over 30 years, the difference between a good call and a bad one is huge. One way to make it tangible: the right decisions at 30 could be the difference between flying business class and flying economy in retirement. Jargon buster Behavioural finance: the study of how psychology and emotions influence financial decisions. Bias: a mental shortcut that feels logical but can lead to poor decisions. Loss aversion: feeling losses more strongly than equivalent gains. Risk aversion: avoiding risk, even when some risk is needed to meet your goals. Recency bias: giving too much weight to recent events. Confirmation bias: seeking information that supports what you already believe. Overconfidence bias: believing your knowledge or ability is greater than it really is. Herd mentality: following the crowd rather than making an independent decision. FOMO: fear of missing out. Homework for the week Write down one or two biases you think you show. They don't have to be about money. Next week What does it actually cost to invest? Brokerage, platform administration fees, investment costs and super fees, and how to compare a platform with a broker account. ------- Mentioned in the episode is Danny Archer's previous episodes on Behavioural Finance - these can be listened to on Apple, Spotify or here on our website - they are Episodes 58 and 61 of the FS360 Podcast by M Group. This article contains general information only and does not take into account your personal objectives, financial situation or needs. Speak to a licensed financial adviser before making any investment decisions.
Investing Starting From Scratch: Our Financial Planners talk about investing in an informative Podcast format. Watch on video on our website and YouTube channel.
Investing Starting From Scratch: Our Financial Planners talk about investing in an informative Podcast format. Watch on video on our website and YouTube channel.
This seminar was held in the M Group Sunshine Coast office on October 1st 2026. We welcomed clients into the room and now here on YouTube to listen to Financial Planners Kym Vivien and Jack Toohey speak, along with Accounting Director Jodie Thompson and our special guest Jonathon Tolub from our Share Market research partner Investsense. ----------------- Trends Shaping Your Wealth + Federal Budget Key Insights. We will be joined by InvestSense, M Group’s dedicated investment research partner, who provide independent research and insights into investment markets and assist with the construction and management of client portfolios. Our seminars aim to be informative and insightful for our valued clients. You can watch the entire seminar here:
