Managing Wealth for Corporate Executives
The life of an executive is often spent on the go, managing time between their business, their employees and, of course, their families. Due to the sophisticated nature of their work and personal lives, executives need a trusted advisor to simplify their complex financial situation.
As your trusted partner, SSG Executive Advisory Group will provide a comprehensive financial plan for your life and all it encompasses. We will work to manage your investments, mitigate your tax burden, and address key issues to prudently plan for you, your family and your future.
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As a corporate executive, you may have the benefit of a non-qualified deferred compensation program. When managed properly and considered in light of other traditional benefit programs and personal assets, such plans can significantly impact positively on your family’s wealth creation and financial plan.
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Executive compensation often includes the ability for our client to build a meaningful position in their employer’s stock. For some, a minimum position in the stock must be maintained, tying the individual’s risk to the company. Such positions must be monitored to ensure compliance and strategy to control the family's risk. By understanding the client's requirements, risk preferences, financial needs, hedging and potential restrictions (blackouts), we actively consult and manage to maintain financial balance.
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Many executives today have the opportunity to participate in a robust stock option program. Managing one’s planning can meaningfully impact the family's wealth creation, but specific focus must be placed on tax exposure. Managing stock option plans improperly can expose the executive client to excessive taxation that may have otherwise been minimized or even avoided.
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Due to the fact executives are often in possession of non-public information, their ability to sell stock in their company can be restricted. By establishing a 10b5-1 selling plan at the right time, the executive may be able to schedule a systematic selling program even while restricted.
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Few executives focus on the true financial implications of retirement while they are still working. Instead, many rely solely upon accumulation of wealth with the hope sufficient capital is owned at retirement. As a result, risk can be introduced via over-concentration, insufficient accumulation or simple missed opportunity. Meaningful impact can be realized when planning begins early and considers all benefit programs and opportunities available. Truly, planning can never begin too early!
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With wealth comes responsibility for an executive's immediate and often extended family, including descendants. We take the time to fully appreciate our clients’ family dynamics, needs, desires, and long-term goals. SSG works collaboratively with clients and their legal advisors to develop, implement and actively monitor a family's comprehensive estate planning solution.
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Enjoying a successful career often benefits a client’s entire family. Such dependence is meaningful and financially difficult, if not impossible, to replace. To help ensure a client's family is secure, SSG performs gap analysis to determine risk of short-coming. Furthermore, SSG can work with clients’ corporate benefits and resource Raymond James Insurance Group (a division of Raymond James & Associates) to recommend and implement a solution.
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Client: Mr. Roberts, a vice president of a Fortune 500 company, was contemplating retirement in approximately four years. He had diligently saved and built a significant portfolio via a 401(k) plan, deferred compensation and employer stock.
Challenge: With so many moving parts and significant involvement in the company, he was unsure how to make the most of what he had worked so hard to attain. His family and work obligations took most of his free time, and yet so much was dependent on careful planning of his retirement.
Course of action: To help ascertain the likelihood of Mr. Roberts retiring on his desired date, our team would perform a detailed cash flow analysis and look at different deferred compensation payout scenarios. We would also look at finding a tax-efficient way to draw down the income he would need to maintain the lifestyle he was accustomed to living.
Because of the many complexities associated with the extensive company stock options he had accumulated during his successful career, advanced planning would be essential. This planning would include evaluating his options using sophisticated tools such as Black-Scholes Option Modeling, ensuring that we conformed to mandatory holdings policies, looking at hedging opportunities, and exploring ways to potentially reduce or eliminate the alternative minimum tax.
To help achieve Mr. Roberts' goals, the team would determine the appropriate mix of assets and perform portfolio stress-testing to illustrate the impact that certain events may have and help him determine his appetite for risk.
With Mr. Roberts’ knowledge and approval, our team would assume the discretionary management of his core assets to effectively manage them on a tactical basis, implementing strategies such as tactical hedging opportunities based upon market risk levels, and laddering a federal tax-free municipal bond portfolio designed to provide income and liquidity.
To mitigate the erosive effect of market downturns, a strict risk management discipline would be implemented by us with a sell philosophy designed to prevent wealth destruction.
To satisfy Mr. Roberts’ desire to leave a legacy for his loved ones and cherished charities, we would work closely with his estate attorneys to develop a plan to meet this important goal, while also helping to ensure proper titling of his accounts, assets and beneficiary designations, and help reduce the effects of the estate and transfer taxes.
Finally, to help Mr. Roberts and his family organize and track all of their financial matters, our team would aggregate his accounts into one convenient access point online, create a secure area for storage of important documents, and automatically maintain constant upkeep of records and financial data.
This hypothetical example is for illustrative purposes and is not representative of any actual experience. Individual results will vary. It is presented only as an example and not intended as investment advice. This is not a recommendation and you should consult with your financial advisor for advice based on your personal situation, financial goals and objectives. Asset allocation and diversification do not guarantee a profit nor protect against a loss. There is no assurance that any investment strategy will be successful. Investing involves risk including the possible loss of principal. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
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