Broker Check

Want to be Smarter With Your Money?

Join our mailing list and get news and info to support your financial goals.



Thank you! Oops!
The Top 5 Financial Planning Challenges of Corporate Executives in Michigan

The Top 5 Financial Planning Challenges of Corporate Executives in Michigan

August 25, 2021

Corporate executives represent a highly differentiated group with distinct characteristics and goals, which makes them ideal for a specialized approach to financial planning.

They need a plan that will help them mitigate tax risk and maximize long-term financial stability. I outlined a few financial planning challenges I see corporate executives face when they start working toward their financial goals.

1. Executives Don't Have Enough Time

Time and money are two key variables in financial planning. Investments need to be monitored and updating your strategy is an ongoing process. While executives are smart and many are capable of handling their investments, they simply don't have time to manage their portfolios.  A survey by Forbes shows that the 2nd greatest challenge for executives is time, second only to generating revenue.1 

As a Michigan dad myself, I know that if you have kids, you're going to want to be outside with your family on the 80 days of sunshine we get each year! My executive clients often tell me that they don’t 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.

Given the daily demand for your time, your free time should be spent doing the activities you love with the people you love. Delegate the financial planning to a financial professional who has the experience to understand your specific situation.

2. Complex Compensation

It's hard enough to manage a team, oversee projects and maintain client relations let alone understand the nuances of investment strategies. Corporate executives often receive incentives in the form of tools like performance shares and deferred compensation plans.  While these can be great wealth-builders, they can be tricky to manage on your own. 

It is also common for executives to have a substantial amount of their net worth wrapped up in their company’s stock. No matter how successful the company is, it's risky to have a majority of assets tied to a single company's future. Your portfolio may be heavily weighted with employer stock and stock options that are subject to rules of which you may not be aware. Be sure to diversify your portfolio and understand the fine print associated with company-specific plans.

3. Lifestyle Discrepancies In Retirement

Planning for retirement isn't just about saving. You should visualize what your retirement will look like. Once the novelty of travel wears off, you can only spend so much time by the pool with a book. Many executives want to keep their lifestyle but struggle to maintain it into retirement because they have failed to save an adequate amount.

It's common for executives to think that they will spend less in retirement, but when every day is Saturday, it can be hard to cut expenses. Luckily, there are strategies to help mitigate this deficiency.

Typically I advise my 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 can focus on building up excess cash reserves and putting as much money as possible into their 401(k).

4. The Spending Trap

Don't assume that you can out-earn bad spending habits. I had clients who were both six-figure earners come to me for a financial plan and I was shocked to see how little they had saved. They had a boat, a nice house, but only about $17k in their retirement accounts between both spouses.

While it is great to have things like a nice car or boat, it's just as important to protect your income and assets. Could you imagine what would happen if one spouse suddenly loses their job? Or if the unthinkable happens and one spouse dies early, the probate process in Michigan takes about 5 months. The loss would be catastrophic emotionally and financially.

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, I can help you choose a policy tailored to your specific situation. 

5. No Game Plan

You wouldn’t start building a house without a blueprint, a sculpture without a sketch, or a company without a mission statement. So, there should be no investing without a plan. 

Like top athletes, high-performing executives have well-educated, experienced coaches they can trust to help with the technical complexities and traps in their financial situation. You face unique financial planning challenges, but you don’t need to be overwhelmed and intimidated by them. 

While corporate executives are extremely capable and talented people, financial planning for this group requires a very specific perspective and the right experience. We at WealthMap Advisors understand this and can offer assistance in meeting long-term financial goals. Schedule a call with me using this link.

a


About Me

I have over 30 years of experience in finance and have the expertise to walk you through each aspect of your financial life. I entered the financial services industry after leaving the U.S. Army, with distinction as a Captain, in 1987. I excelled in the industry and was serving as a regional sales director for a leading insurance company when I was hand-picked by Stephen to join the team in 2002. 

Whether you need to get started on your financial game plan or have questions about strategies that may work for you, contact me anytime to set up a no-obligation conversation.

1. Forbes, https://councils.forbes.com/blog/top-5-executive-challenges