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Stay Ahead of the Game: The Top 5 Financial Challenges Faced by Executive Employees

Stay Ahead of the Game: The Top 5 Financial Challenges Faced by Executive Employees

June 09, 2023

Corporate executives are no strangers to high-pressure situations. They’re responsible for the financial stability of their organization while managing a wide range of complex issues. But outside of the boardroom, executives face unique financial planning and retirement challenges that require careful consideration. Despite their high earning potential, executives’ compensation and investment packages often demand specialized strategies to mitigate tax risks and maximize long-term financial stability.

At T.M. Wealth Management, we understand the specific financial planning needs of corporate executives. With our experience and knowledge, we can help you pursue your long-term financial goals to prepare for retirement with confidence. In this guide, we’ll outline the top five financial planning challenges faced by corporate executives, along with practical solutions to overcome them. Let us help you navigate the complexities of wealth planning so you can focus on what you do best—leading your organization to success.

1. Complex Compensation 

Unlike most salaried employees, executives need a wealth management plan that specifically addresses the complexities of their compensation and incentive plans—as well as any tax implications.

For example, many corporate executives have a substantial amount of their net worth wrapped up in their company’s stock. However, having a larger portion of your income tied to the company’s success—or failure—can create unnecessary risk. That is why it is incredibly important for corporate executives to diversify their investment portfolio and create a plan to strategically sell shares of stocks in the future. 

2. Lifestyle Discrepancies in Retirement

As we noted above, corporate executives have specific needs when it comes to their compensation, especially in retirement. Many executives struggle to maintain their lifestyle into retirement because they have failed to save an adequate amount that will allow them to keep the lifestyle they became accustomed to. Luckily, there are strategies to help mitigate this deficiency. 

Typically we advise our 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 should focus on building up excess cash reserves and putting as much money as possible into their 401(k). 

3. Unforeseen Tax Implications

Corporate executives may also have access to deferred compensation plans, such as top hat plans or benefit equalization plans, which can be helpful tools in retirement. These plans typically allow an individual to choose a specific date in the future for when a portion of their compensation is paid to them by the company. 

Many executives choose a lump sum when they retire without understanding the full tax implications related to the payout’s timing. This strategy results in a higher tax bill attached to the lump-sum payout. We often advise our clients to stagger the payments so that the tax implications can be absorbed over a few years, which also decreases the overall tax burden.  

4. Protecting Income and Assets

Many corporate executives financially support households in which they are either the primary income earner or the sole income earner. This leaves their family vulnerable to financial uncertainty if something were to happen to them.

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

5. Spend Your Free Time Wisely

Often corporate executives tell us 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. We get it. Executives are smart and driven professionals who are very busy working and providing for the people they love. 

Given the daily demand for your time, your discretionary time should be spent doing the activities you love with the people you love. Delegate the financial planning to professionals like us, who have the experience to understand your specific situation and can introduce financial strategies that will protect you and your family’s financial stability into the future. 

This not only grants you peace of mind but also allows you to spend your limited free time in a meaningful and less stressful way. 

Partner With a Trusted Professional

If you’re a corporate executive feeling uncertain about your financial plan as retirement approaches, take comfort in the knowledge that you’re not alone. You don’t need to be a financial planning expert; you just need to know who to turn to for guidance. Our team at T.M. Wealth Management is here to help you tackle these tax issues and any others you may face. With objective advice and a commitment to your financial success, we’re the partner you can trust. Reach out by giving us a call at (703) 537-8351 or emailing and let’s start planning for your future together.

About Thomas

Thomas R. Seneca is Managing Partner at T.M. Wealth Management, a wealth management firm that focuses on independent, boutique, and fiduciary services for clients. After gaining extensive finance and investment experience working as an investment banker on Wall Street and in Silicon Valley, Thomas had a desire to work more closely with clients and positively impact their lives by helping them make better financial decisions. He started his own practice and now works with successful professionals to help them simplify their financial needs and optimize their wealth to pursue their goals. Thomas knows the positive impact that good financial decisions can have on families and individuals, and he strives to help give clients financial confidence so they can spend their time on what matters most to them.

Thomas holds a bachelor’s degree in economics from Brigham Young University and an MBA from Columbia Business School. Thomas is an avid golfer, fluent in Spanish, and served as an adjunct finance professor at Virginia International University in the Washington, D.C., area. Outside of work, he enjoys traveling, spending time with family, and attending church. To learn more about Thomas, connect with him onLinkedIn.