Making the right financial decisions requires focus on the many moving parts of your life, even as your career still demands much of your time and energy.
Some planning imperatives to take into account as a senior manager, are:
- Redefine long-term goals. Consider lifetime spending needs and your vision for your family and legacy. Do you need to consider elderly parents and children?
- Establish a retirement plan that ensures income from different income sources. Superannuation, investments, pensions, property and shares all play a strategic and complementary role
- Effectively manage your complex and growing investments with a disciplined strategy, likely with the help of trusted professionals
- Create a plan to protect and transfer wealth, including charitable giving strategies that support personal goals and align with financial objectives.
As a senior executive, your wealth is now likely to be comprised of a complex combination of salary, bonuses, restricted stock, gains from exercised options, superannuation and an investment portfolio.
It is also common for established executives to discover that hidden investment risks have grown in conjunction with their career. For example, you may be holding a concentrated position of a particular stock.
Concentrated positions often conceal risks behind a wave of growth. When considering a mid-career executive’s retirement accounts, options, restricted stock and purchase plans, the degree of exposure to a single stock can be an overwhelming part of a portfolio. And while a concentrated position can be one of the biggest creators of wealth, it can also be one of its biggest destroyers.
Complex tax issues likely exacerbate your situation. Your goals and life circumstances have most likely changed significantly since your career began. As a result, your original plan may now be outdated, insufficient or both.
Even if you’re the exception—whose goals and circumstances haven’t changed—the world continues to change at a faster pace every day. Plans built on yesterday’s assumptions about market returns or future expenses may not hold up.
Furthermore, you probably have less time than ever to think about them. Addressing these issues can be less involved than it appears however, and is well worth the attention. A knowledgeable advisor can guide you through the financial maze, making the best use of your time as you take key steps necessary to ensure tomorrow’s security.
Verify that your long-term goals still make sense. Consider lifetime spending needs, determining the income necessary for your current and future lifestyle. Assess all your future income sources and expenses. Take time to revisit your family and legacy objectives—and redefine your vision if needed.
Refine and execute your plan
Your plan should continually be refined to reflect new realities. These can include market expectations, regulatory and legislative changes, tax laws, and lifestyle changes. Births, deaths, marriages, divorces and other factors should be reflected in your overall plan.
At this stage of your career, a total portfolio asset allocation strategy can be a wise move for ease of management, and as a time saving tool. Investments should be coordinated and work together; tax and wealth management strategies should be integrated. This is also a good time to develop or re-examine your concentrated wealth strategy positions and to make sure your retirement plan is incorporated into your overall game plan.
Prepare your family
Preparing your family to receive the money is just as important as preparing the money for your family. Where possible, involve family members in wealth decisions, making your wishes clear. Address issues, such as the need to create a family trust with your advisor, legal team and loved ones. By taking the mystery out of money, you better equip your family for their eventual role in preserving and growing wealth.
Explore the role of philanthropy
Philanthropy can also be a valuable strategic goal that lets you incorporate your personal values into wealth planning while generating a constructive social impact and providing a valuable legacy. By achieving a balance between doing well and doing good, you can ensure a legacy far beyond your years, and your assets.