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5 Financial Planning Challenges of Corporate Executives

5 Financial Planning Challenges of Corporate Executives

January 16, 2024

As a corporate executive, you likely shoulder a heavy load of responsibilities both at work and in managing your personal finances. At least that is what we see with our clients. In particular, high-income earners grapple with unique financial complexities ranging from retirement planning to mitigating tax risks. On top of that, corporate compensation and investment packages demand the use of specific strategies as you pursue long-term financial stability

Because corporate executives often find themselves with limited time to dedicate to financial planning, a strategic and efficient approach is crucial to reach your financial goals. At Wellstone Wealth Management, we understand the nuances of these complexities. In this article, we share five financial planning challenges that corporate executives commonly face and explore strategies to address them.

1. Complex Compensation 

We have noticed that unlike most salaried employees, executives need a wealth management plan that specifically addresses the complexities of their compensation and incentive plans—as well as any tax implications.

For example, we have seen many corporate executives who have a substantial amount of their net worth wrapped up in their company’s stock. However, having a larger portion of your income tied to the company’s success—or failure—can create unnecessary risk. That is why it is incredibly important for corporate executives to diversify their investment portfolio and create a plan to strategically sell shares of stocks in the future. 

2. Lifestyle Discrepancies in Retirement

As we noted above, corporate executives have specific needs when it comes to their compensation, especially in retirement. Many executives come to us struggling to maintain their lifestyle into retirement because they have failed to save an adequate amount that will allow them to keep the lifestyle they became accustomed to. Luckily, there are strategies to help mitigate this deficiency. 

Typically we advise our clients that the more they earn, the more they need to save to preserve their current lifestyle throughout retirement. This means, in peak earning years, corporate executives should focus on building up excess cash reserves and putting as much money as possible into their investments. 

3. Unforeseen Tax Implications

Corporate executives may also have access to deferred compensation plans, such as top hat plans or benefit equalization plans, which can be helpful tools in retirement. These plans typically allow an individual to choose a specific date in the future for when a portion of their compensation is paid to them by the company. 

We have observed a trend that many executives choose a lump sum when they retire without understanding the full tax implications related to the payout’s timing. This strategy can result in a higher tax bill attached to the lump-sum payout. We often advise our clients to stagger the payments so that the tax implications can be absorbed over a few years, which typically decreases the overall tax burden.  

4. Safeguarding Income and Assets

In our experience, many corporate executives financially support households in which they are either the primary income earner or the sole income earner. This can leave their family vulnerable to financial uncertainty if something were to happen to them.

Most couples choose to mitigate risk by investing in disability insurance or life insurance to replace income in the event of any unforeseen circumstances. If you are unsure which policy would specifically meet your needs, we can help you choose a policy tailored to your specific situation.  

5. Spend Your Free Time Wisely

Often corporate executives tell us that they do not have a lot of free time, and when they do have a moment to spare, the last thing they want to do is spend it working on a financial plan. We get it. Executives are smart and driven professionals who are very busy working and providing for the people they love

Given the daily demand for your time, your discretionary time should be spent doing the activities you love with the people you love. Delegate the financial planning to professionals like us, who have the experience to understand your specific situation and can introduce financial strategies that will protect you and your family’s financial stability into the future. 

This not only grants you peace of mind but also allows you to spend your limited free time in a meaningful and less stressful way. 

A Partner to Set You Up for Success

If you are a corporate executive approaching retirement and feeling uncertain about your financial plan, the Wellstone Wealth Management team is here to help. We understand the unique challenges executives face, and we can provide unbiased answers and strategies you can have confidence in. We take a Return on Life (ROL) approach that provides a deeper, more personalized look at where you want to be. 

Let us be your trusted partner in navigating the complexities of financial planning toward your ideal financial future. Reach out to schedule a complimentary introductory meeting by contacting us at 503-594-1210 or info@wellstonewealth.com.

About Greg

Greg Allen is a CERTIFIED FINANCIAL PLANNER™ professional, Life-Centered Financial Planner, Managing Member, and second-generation owner of Wellstone Wealth Management, a life-centered financial planning firm that takes a unique Return on Life (ROL) approach to help their clients live the best life possible with the money they have. With over 20 years of experience, Greg holds fast to his mission of helping clients plan their finances around their lives, instead of the other way around, resulting in fulfillment, confidence, and a meaningful life. Greg also provides a caring, trusted long-term relationship and life-centered financial behavioral counseling. He specializes in working with people who have recently retired or are close to it (typically five years or less) and relates well to corporate executives and upper-management couples who often have complicated financial pictures and need help maximizing their wealth, reducing their taxes, and preparing for retirement so they can maintain their ideal lifestyle. 

When he is not helping his clients find meaning and purpose, you can find Greg spending time with his friends and family, especially his wife, Sandy, children, and grandchildren. As a native Oregonian, Greg loves the outdoors, visiting the Oregon Coast, and retreating to their family cabin in the mountains. He enjoys staying involved with his church, reading, watching sports, and anything to do with exercise and wellness. To learn more about Greg, connect with him on LinkedIn.

Information provided herein is provided by Wellstone Wealth Management, LLC. This information is for general informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Information was compiled from third-party sources believed to be reliable and accurate but cannot be guaranteed. Investment advisory services are offered through Oswego Wealth Advisors, Inc., an SEC Registered Investment Advisor. Neither Wellstone Wealth Management, LLC nor Oswego Wealth Advisors, Inc render any legal, accounting, or tax advice. All investments involve risk, are not guaranteed, and may lose value. We recommend that all investors consult with a qualified adviser to assess your personal situation before implementing any strategy.

Please remember to contact your advisor when your financial circumstances or objectives change. Your advisor may recommend adjustments to your financial planning and investment strategies to better suit your current situation.