By Stephanie Bruno

It’s not hard to find general financial planning advice. But “general” won’t work for you as an executive. Your lifestyle and finances can get complicated and you need specialized advice for the challenges and unique opportunities you face. 

For example, you are pulled in many directions in a fast-paced environment, all while your personal wealth is inextricably linked to the prosperity of your company. Ultimately, the professional demands on your time often leave little margin to focus on the details necessary to optimize the financial future for you and your family. And when you do have a free moment, it’s hard to know where to start. While this is just the tip of the iceberg, here are some of the most important financial planning actions you can take to put you on the road to financial success.

Minimize Those Taxes

As a corporate executive, you are likely highly compensated. While this is a reward for your dedication to your company, it can create tax headaches. The more you make, the more you’re taxed, unless you employ tailored tax strategies to maximize the money you take home. Your goals are to maximize tax deductions, minimize your taxes both now and in retirement, and have a tax-efficient estate plan in place. 

You also need to consider the tax implications of your company stock and required minimum distributions and be aware of all the details concerning any Supplemental Executive Retirement Plan (SERP) so you don’t get hit with extra taxation or experience financial surprises down the road. For example, many SERPs allow you to choose your future payout date. This allows you to use tax smoothing and stagger payout dates to spread the tax burden around. 

A professional who has experience working with executives will be able to help you minimize your taxes while working to create a plan to lower your tax burden in retirement, all while taking stock options, pension, personal retirement savings, and other investment accounts into consideration. 

Understand Your Stock Options

As an executive, your company probably provides multiple equity-based compensation programs in addition to your salary. Unfortunately, equity compensation is quite a bit more complicated than cash. To maximize their value, you need to understand and stay on top of your stock options, including when they vest, expire, and how they are taxed. Familiarizing yourself with the 83(b) election or the new 83(i) election may also yield a potential advantage. And, if you have been with a company since its early days, a Qualified Small Business Stock election could provide enormous value. Additionally, of course, restricted stock units, 10b5-1 plans, and employee purchase plans are important to understand if you want to receive the maximum benefit they provide.

Invest Wisely 

Even if your company has a track record of success, you don’t want the bulk of your financial future tied up in the business. Consider this: as an employee, you are already investing in your company. You believe in its success and security, which is why you work there. You might also contribute to your company 401(k) plan, which is another investment in your company. But if most of the stock you own is in the company, you could be putting all your eggs in one basket. If the company went under or suffered a major setback, you could lose your income, your benefits, and your portfolio could take a major dip. You need a balanced investment portfolio.

Working with a professional, you can evaluate your portfolio’s current lineup and whether it needs to be rebalanced or diversified. Be sure to partner with someone experienced in employee stock options. There are certain rules, such as insider trading policies and SEC regulations, that may apply to your situation and affect your decisions. 

Cover Your Bases

Financial planning involves more than just saving for retirement and balancing your portfolio.   An effective plan covers every aspect of your life and will help you confidently answer important questions such as:

  • Am I saving enough for the future?
  • How do I maximize the distributions I can take from my portfolio?
  • How much will I need to save to educate my kids?
  • How will a major purchase or milestone impact my plan?
  • Will my family have the resources they need should anything happen to me?

And don’t forget about your ever-important estate plan! You have a large number of assets to your name and don’t want to leave these to chance should something tragic occur. If you do not have an estate plan, then it may be up to the government to make decisions on your behalf. Creation of a basic living trust should include living wills, healthcare directives, instructions, and conditions for how inheritances are received, powers of attorney, and nominations for successor trustees and guardians.

How We Help Executives

As a successful corporate executive, you have unique needs and goals. Your financial security is disproportionately tied to your employer. You have a complex benefit plan. You’re subject to a unique set of legal risks. And you’ve probably accumulated a large number of stocks in your company, resulting in unnecessary portfolio risk.

At Sea to Peak Financial Advisors, we have years of specialized experience and education to handle your financial needs. We can help you manage your compensation, benefit, and retirement plans so that they are working for you now and in the future. To learn more about how we help executives plan for a successful future, schedule a 15-minute phone call today or email us at info@seatopeakadvisors.com.

About Stephanie

Stephanie Bruno is the founder of Sea to Peak Financial Advisors, an independent, fee-only financial advisory firm helping executives bring meaning to their money. Stephanie earned a bachelor’s degree in finance from the University of New Orleans and a bachelor’s degree in English from Ohio State University and holds the Certified Financial Planner® (CFP®), Accredited Investment Fiduciary® (AIF), Certified Private Wealth Advisor® (CPWA®), and Retirement Manager AdvisorSM (RMA®) designations. She splits her time between Denver and Seattle, where her husband, Steve, serves as the head of Westside School. Outside of the office, Stephanie honors her mom by serving as board chair of the Women’s Foundation of Colorado. Stephanie and Steve have two smart and accomplished daughters, Emma and Leah, who are currently college students, as well as three lovable dogs. To learn more about Stephanie, connect with her on LinkedIn.

Stephanie Bruno is an Investment Advisor Representative of Dynamic Wealth Advisors dba Sea To Peak Financial Advisors. All advisory services offered through Dynamic Wealth Advisors.

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