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Wealth Management Planning For Company Executives


As a corporate CEO, some might think that your days of money worries are over. In fact, CEOs need effective wealth management more than anyone, for a variety of reasons. If you’re in that position yourself, then you’ll know that taking care of the money you make is almost a full-time job in itself, and one that simply can’t be neglected or taken for granted.

Planning For The Future

Retirement planning is a major part of wealth management for CEOs. This is because as a company executive, you have more options to choose from in terms of pension plans and corporate benefits, many of which have to be carefully balanced in order to get the best out of them.

wealth mgmt

The more money you make, the more you seem to need. At executive level, you need to be able to rely on a relatively high level of income in order to be able to maintain your current lifestyle after retirement, even if you live quite modestly.

You also need to consider your level of career risk. Very few CEOs can say that their position is totally secure. Should you have to leave your current role, would you be able to find a comparable one easily? Managing your existing wealth through saving and investment is one way to protect yourself against this eventuality.

Always Save

This should be the case at every stage of your career, whether you’re a low or a high earner. If you’re young and not earning much, it’s tempting to spend your entire salary every month or even a little bit more. Saving, you might reason, will have to wait until you’re a bit better off. However, when you are earning a more-than-decent income, you may not pay as much attention to saving as you should, because you think that you’re doing alright and things can only get better.

always save

Always try to save at least 20% of your income, and when the going is good, put as much as you can into your 401(k) and other savings plans. You should also take advantage of any deferred compensation plans that you’re eligible for – ones that let you select a specific date, or dates, for payment of any retirement compensation due to you.

Choose this date carefully as it may make a great deal of difference in terms of how much tax you have to pay. Taking a lump-sum payment on the first day of your retirement usually isn’t the best decision. Staggered payments spread out over several years will give you a smoother transition into retirement while avoiding unnecessarily large tax bills.

Talk to the Experts

There are many companies that offer wealth management services suitable for CEOs, including Creative Planning Inc., whose president, Peter Mallouk, is the author of the book The Five Mistakes Every Investor Makes And How To Avoid Them. For comprehensive retirement planning advice, as well as general wealth and investment management, it’s well worth sitting down with the experts and seeing what they have to say.

Don’t Put all your Eggs in One Basket

Most CEOs own a large amount of their own company’s stock, usually acquired on preferential terms. While it’s right and good that CEOs should have this option and be able to profit from their own efforts in steering the company to success, you should avoid becoming too reliant on it. Having your current income, your pension and your investments all tied to the fortunes of the one company is a risky position to be in.

As soon as possible, engage a tax specialist to help you exercise your stock options, while hanging on to any stock that you have in an employer plan, especially if this gives you a Net Unrealized Appreciation (NUA) distribution option on retirement. This should let you distribute company stock from your retirement plan while only paying income tax on its cost basis. The rest is considered to be capital gains, and is taxed at a lower rate.

Diversify your Income Sources

It’s often a good idea to have more than one income stream as a CEO. This helps reduce the level of career risk mentioned earlier and also gives you more varied options for managing your money. An executive position can be combined with consultancy work, for example, or active investments such as real estate. This last option is a popular one for CEOs looking to invest excess funds, and can often turn out to be one of their main income streams if done properly. The more time and effort you put into managing your real estate, the more you’ll get out of it, but even a passive property investment will almost certainly increase in value in the long run.

Wealth management at an executive level can often feel like a difficult juggling act, keeping all of your balls in the air at once. Like juggling, though, it’s not that difficult once you’ve got the hang of it. However, it does require a level of focus and concentration that you can’t always afford to give, which is why sometimes it’s best to get specialist advice on where your money should be going.