Skip To Content

Unique Financial Planning Considerations for Corporate Executives

The need
for effective, comprehensive financial planning is, of course, universal.  Planning for corporate executives, however,
presents some unique challenges because of their unique circumstances. 

Certain
of these circumstances are more tangible/obvious.  For example, executive compensation packages
often result in substantial concentration of wealth in company stock.  When coupled with the fact that salary and
benefits, and perhaps also assets held in a deferred comp program, are
contingent on the continued health of the company, the resulting concentration
of risk can be substantial.  These risks
need to be managed and may require customization of the normal
investment-planning process.  Similarly,
these same equity incentive packages also often create complex tax planning
challenges and opportunities. 

As well,
lack of liquidity via concentration in company stock, along with complex
retirement and deferred comp assets, may call for unique estate planning
tactics.  These may include asset titling
and gifting strategies, and use of unique trust arrangements to deal with the
complexity. 

Many of
the of the planning considerations for corporate executives are not as obvious
and are more “intangible,” although they are equally as important in creating
an effective plan.  It is always helpful
to keep in mind that corporate executives are leaders, goal-oriented, and often
have type A personalities.  Executives
are generally very comfortable in an advisory relationship with a wealth
management professional, but most may wish to be a driver in the process as
they are accustomed to that role.  Also,
the advisory firm should have the resources and personalities that can satisfy
the executive’s desire for intense and comprehensive communication and
reporting process. 

Time may
also be an issue.  Corporate executives
are so busy with the demands of running their companies, they have often
neglected their own financial planning for long period of time.  The advisory firm must be prepared and
equipped for extensive up-front due diligence to get everything up to speed.  The firm must also be prepared to deal with
the challenges of getting on the executive’s very busy calendar to conduct the
necessary meetings. 

One issue often encountered is that many executives naturally have an attachment to the company and the stock that has made them wealthy, and where their leadership role was instrumental in the company’s success.  This may present emotional hurdles that need to be surmounted in implementing an effective and rational financial plan.  Timing of diversification strategies may need to be carefully implemented to take account of this natural affinity for company stock.  Perhaps the most overlooked aspect of executive planning is the need to plan for the “next act” after retirement from the executive role.  Many of us look forward to a relaxing retirement that is relatively free of career-type commitments.  Executives, however, are by nature ambitious, and have spent decades ascending to leadership positions and driving their companies to success.  More than most, they have a need to remain productive and within leadership roles.  Ample planning resources, therefore, must be allocated to devising investment strategies that consider the range of possible ventures the executive may take on in “retirement.” 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Talk with an advisor.

Engage with a qualified partner for financial guidance built on loyalty, empathy, and integrity.

Talk with an advisor.

Engage with a qualified partner for financial guidance built on loyalty, empathy, and integrity.