Executives face many unique challenges when managing their personal financial plans.
These individuals are often consumed by the demands of their occupation and are unable to dedicate the necessary focus to their personal financial situations.
The executive needs to review his or her personal finances to ensure the integration of benefits and compensation with strategies for estate planning, investment planning, income-tax preparation and planning, risk management and long-term cash flow/retirement planning.
The executive has many unique concerns that can include liquidity issues, concentrated stock positions, transfers of vested stock options, giving to charity in a tax efficient manner, executing and funding buy/sell agreements, lifetime gifts and estate taxes. Planning for retirement is another hurdle that brings up questions such as the person to name as the beneficiary of qualified plan assets, forecasting of complex benefits, compensation planning and income in respect of a decedent, and the level of health care coverage.
Executives also must focus on the structure of business entities to reduce liability. Should they consider a family limited partnership or limited liability company? And how much liability insurance is enough?
Too many times executives receive advice targeted to handle one piece of their very complex picture. It is important to find a professional fee-based team to assist them.
Why? This makes sure the adviser team is acting in the executive’s best interest.
A fee-based team of advisers goes a long way in ensuring the adviser is making recommendations that are best for the client. None of the executive’s advisers should be getting compensation from the companies they recommend.
It is also critically important the executive have advisers who are communicating. A certified public accountant, estate planning attorney and an investment professional should be discussing the executive’s income tax bracket, the impact of the Medicare surtax, estate tax rates, investment options and many other important considerations.
All of these professionals have different areas of expertise and a different relationship with the executive; sharing information and working together will enhance the planning result for the busy executive.
Without understanding the executive’s complete picture and goals, it is impossible to make recommendations that will result in the best solution.
The business executive needs an integrated comprehensive plan that addresses estate planning, asset protection planning, income tax planning and retirement planning. This plan should be revisited at least annually or when there are major changes in any area.
The adviser also must help the executive define personal philosophies and objectives. Often in today’s busy world, we don’t place enough importance on the legacy that the executive wants to leave and how he wants the wealth they have accumulated to impact their family and friends.
As the executive approaches retirement, there are many issues to discuss – and not all are financial.
Whether you are eagerly anticipating the day or it’s a forced event, consider the following:
• Are you ready for the next phase?
• Do you have a plan for what you want to do?
• Are there other things you want to accomplish in retirement?
• Have you thought about both good and bad aspects of the transition?
Many people define themselves by their profession and business accomplishments during their working years. A large part of self worth, long-term relationships and a daily life structure come from careers. Some people embrace this new beginning: spending more time with family, hobbies or volunteering. Others, even the most financially secure, worry about no longer having that regular paycheck. They struggle with transitioning from the accumulation phase of their lives to the distribution phase.It may very well be lonely at the top, and it also can be complicated. Working with the right advisers and formulating a comprehensive plan can provide for a smoother transition to retirement.
Jami Peebles is executive vice president and southern regional manager of Central Trust & Investment Co. Based in Springfield, Peebles also is a certified trust and financial adviser. She can be reached at Jami_Peebles@centrustco.com.[[In-content Ad]]
