Executive Compensation Financial Planning

Executive compensation plans have only increased in complexity as company strategy and compensation programs have juggled with balancing an executive pay structure that everyone can agree upon. This has resulted in comprehensive plans involving a medley of base salaries, long and short-term incentives, equity in the company, and severance packages.

All of these modern compensation plans have created a need for comprehensive wealth management for executives. As these compensation packages and plans continue developing  and become more complex, the more urgent the need for an experienced wealth manager to help you manage your compensation package becomes.


In order to meet your financial goals, you need to have a clear understanding of what they are and the timeline in which you would like to achieve them. Only after you do this can you begin formulating a plan to achieve your financial aspirations. When it comes to your compensation plan, remember:

  • Have a clear understanding of your current financial standing
  • Understand how your compensation plan works and its benefits
  • How does your compensation plan fit into your larger financial plan, and how are you planning to maximize its benefits?

It is necessary to take time to review your own portfolio and ensure that your risk profile is still appropriate and that your investments meet your needs and expectations. Regular checkups on all aspects of your financial plan, from retirement, investments, and estate planning, are crucial to having a healthy financial standing. It is important to do this around big life events, such as marriage and divorce, large wealth fluctuations, the birth of your children, and any subsequent significant events involving them.


Build a Plan to Achieve Your Goals

Once you have a clear understanding of your plan and how it fits into your financial situation, you can begin to develop a plan to help you achieve your financial goals. This can be a daunting task, especially for executives who don’t have much time to focus on their financial planning and retirement savings.

Working with a CFP® professional from Brown | Miller can help you manage your plan and update you on any notable changes from the plan or within the financial world. A wealth management firm like Brown | Miller can help you with the following:

  • Monitor any vested assets
  • Help you avoid any tax consequence with advanced tax planning strategies
  • Understand and monitor any holding requirements for stock options
  • Help you analyze if you are over-exposed, and if it is a cause for concern

For executives looking to maximize their compensation plans and optimize their retirement, consider working with a Brown | Miller advisor to help with all your financial needs


Optimize Deferred Compensation Payouts

When planning how your deferred income will be distributed, it’s crucial to understand the right tax strategies and your own cash flow needs. Your retirement income is a good place to start.

Deferred compensation questionnaire, are you doing it right? Monitor and manage your executive compensation planA deferred compensation payout offers executives many options for how they want to structure their payout in retirement. While you may be given the option to withdraw in a lump sum over the course of 10, 15, or even 20 years, you need to ensure that whatever option you choose fits in neatly with your other retirement income.

Working with a wealth management firm can help structure your retirement income appropriately so that your earned income from retirement accounts and Social Security is used efficiently, and your deferred payout is optimized so that you can maintain your lifestyle comfortably in retirement. You want to structure this, so you don’t jump up tax rates and have to pay taxes at a higher rate than anticipated and have your income diminish prematurely.


Ensure your Executive Compensation Plan fits in with your Financial Plan

Your overall financial plan has many components, from retirement and estate planning to investment management and tax planning. Working with an experienced advisor can help merge all of these components efficiently and strategically to work for you.

Understanding what your whole compensation plan consists of is one thing, but knowing how to tie it together with the rest of the moving parts that make up your financial plan is something else entirely.

Do not wait until you are getting close to retirement to seek help or formulate a plan on your own. The sooner you can begin to plan, the better. Working with an advisor and having ample time will help ensure that you can see the entire picture and understand it instead of making a costly mistake that impacts your cash flow, income tax bracket, or harms your chances of living the lifestyle you desire in retirement.


Schedule an appointment with our team today!

Executives who begin working with an advisor earlier in their careers can expect to maximize their compensation package and have a better overall plan for their retirement and other investments along the way.


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Disclaimer: This article is intended for informational purposes only, and not to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally.
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Author: Christopher W. Brown, CFP®, CIMA®

Christopher W. Brown is the Founder and Managing Principal at Brown | Miller Wealth Management.