Executive compensation can include dozens of components, from salary and incentive plans, to stock options, stock appreciation rights, and performance units. Due to regulations and changing circumstances within a company, arrangements may continually evolve for better or for worse.

Meanwhile, executives often have the option to make complex, high-impact elections and decisions regarding their benefits package. Common questions include:

  • Should I participate in a non-qualified deferral plan?
  • How will early retirement affect my pension calculation?
  • What choices can I make now that might lower future tax liabilities?
  • Should I consider an early buy-out package?
  • How much do I need in order to retire while maintaining my current lifestyle?

As an executive, managing your wealth can be overwhelming. It’s easy to put it off until later while you focus on your career.

Unfortunately, waiting is always a mistake. Every month that your assets remain un-optimized represents significant loss of growth, with simultaneous exposure to unnecessary risk. Loss of compounding growth over even a few years can cost your family its long-term stability, accustomed lifestyle and delay retirement. In fact, if you wait to take charge of your full portfolio until you have the time, it may be too late to accomplish your goals at all.

As you gain wealth on the front end, it’s critical to build a road map not just for your own future, but for multiple generations to follow.

The first step is to know where your personal wealth currently stands. If you don’t understand your current position, it’s difficult to plan effective strategies for reaching your goals. More than likely, your income stream and net worth are comprised of a wide variety of assets, possibly including:

Income Sources

  • Salary
  • Equity compensation
  • Short- and long-term incentive plans
  • Non-qualified stock options
  • Non-qualified deferred compensation
  • Incentive stock options
  • Restricted shares
  • Performance units
  • 401k and other retirement plan contributions
  • Medical and other forms of insurance

Assets

  • Life insurance
  • IRAs and qualified plans
  • Capital market investments
  • Real estate (ranches, lake houses, vacation homes)
  • Boats
  • Rental properties
  • Oil and gas assets
  • Other business interests

It’s also important to conduct a comprehensive analysis of all the assets currently at your disposal, as well as the options available for expanding those assets. Questions you want to answer during this stage include:

  • How much wealth do you currently have at your disposal?
  • How is it distributed in each type of asset?
  • What is the full monetary value of your compensation package?
  • What dollar amount does each element of your package represent?
  • Are there elements of your compensation package that you are not maximizing?
  • Are you using your benefit plans well?
  • Which elements of your wealth and compensation cannot be redistributed at this time?
  • Which elements can be redistributed, and what are your options for them?

With a clear picture of your current state and a measurable set of goals, you’re prepared to build a road map to get you from here to there. Your plan should take into consideration not only your current and desired states, but also all the many choices and variable conditions that may occur along the way. It should also remain flexible to account for changing circumstances over the years.

Fortunately, you don’t have to make this journey alone, nor should you. Kanaly Trust can help you through the essential steps of an effective wealth management approach, support you through the financial planning process and execute your plans to achieve your goals now and for many generations to come.

Disclosures

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the Funds or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.

There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.

Diversification may not protect against market risk. There is no assurance the objectives discussed will be met. Past performance does not guarantee future results Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.