Are You Helping Your Executives Make Smart Financial Decisions Today?

Executives are faced with a unique set of financial challenges and opportunities. And your company plan design can be a key part of supporting this employee population. Here are some strategies to keep in mind.

At different stages of their careers, employees may have different financial goals—and with five generations currently in the workforce, the wide range of employee needs and concerns is now even more pronounced. While younger employees may be concerned about how to build up emergency savings, your executives may be thinking further ahead, about such things as the tax benefits of deferring compensation weighed against the necessity of being able to pay for their child’s college education. 

A benefits plan design that is one-size-fits-all lacks these distinctions. And employers may be missing the opportunity to design workplace financial wellness, retirement solutions and equity compensation plan benefits that meet employees where they are—whether those employees are junior staffers focused on paying down student debt, middle managers with a goal of buying a home or executives working through the complicated tax implications of various benefits decisions.

Having the ability to reach employees in the different stages of their lives matters, because when you help employees solve financial problems and meet financial goals, they tend to be more invested (literally and figuratively) in the company. Many companies only speak to plan design within their retirement offering. However, it’s important for benefits providers to consider plan design across their major financial benefits plans. Customizing your offerings by employee segment helps you ensure that the junior and mid-level employees in your organization are as well taken care of as the veteran leaders, because the today and tomorrow of your entire workforce matters.

Put another way: A career is a long and varied journey. “We’re talking about 40 to 50 years of saving for retirement, and then 20 to 30 years of drawdowns,” says Tom Conlon, Head of Retirement Sales, Morgan Stanley at Work. “How does a company understand an employee’s needs at each life stage, and how do they match the benefits—especially services that are incredibly complicated?”

And the executive segment is a great place to start, specifically because this group has a complex set of financial needs, which one-size-fits-all plans don’t account for.

The Financial and Tax Planning Challenges Executives Face

Whether an executive is seasoned or is moving into the C-suite for the first time, they have a distinct set of considerations around their portfolio. “They likely have some financial wealth already, and they probably have contractual obligations to have stock levels. They know they have to diversify, so how do they balance?” says Dee Crosby, Executive Director, Learning & Development, Morgan Stanley at Work.

Plus, executives may have deferred retirement income. This means they need to make decisions today that greatly impact their future—a future that includes retirement and perhaps leaving a legacy, but may also include helping an adult child reach a financial milestone like buying their first home. “Do the executives within your organization understand the ins and outs of nonqualified deferred compensation plans? There are large tax implications that can be quite complicated to figure out. If you’re not in financial services and well-versed in tax code, you likely need help,” Conlon says.

Also, with recent market conditions, some organizations are operating under tighter budgets. Executives who may have felt financially secure just a short time ago may now be re-evaluating their plans and thinking anew about their financial wellness.

Or they might be experiencing the opposite: For the first time, they feel financially secure, but with that increased wealth comes unfamiliar obligations. “When someone moves into an executive position for first time, they suddenly have access to brand-new services they are not used to, and they need guidance on how to meet contractual agreements,” Crosby says.

How Plan Design Can Help Executives

With these challenges in mind, here are some insights into how good plan design can help your executives: