Business Services
Business Succession
Ultimately, all business owners must decide in what capacity they want their business to continue, what their own long-term individual contributions will be, the best way to ensure the ongoing care of their clients, and the optimal direction and strategy to execute those objectives. If your business has not yet developed or communicated a plan for business continuation in the event of an unexpected incident or catastrophe (e.g., the unexpected death or disability of an owner or key decision-maker, or a natural disaster), you may be missing an opportunity to safeguard your business from potential devastation.
While financial considerations are often the primary focus, philosophical and emotional considerations that may not be as clear also play a vital role in the approach and design of a succession plan. We will work closely with you and your professional advisors to identify areas of concern and opportunity and provide solutions that help to bring certainty to the future of your business. We design plans intended to help your reputation—with your business identity within your community, among your customers, and within your industry—remain intact in the event of a significant change.
Corporate Retention Strategies
Given the current competitive business environment, we believe that an executive benefits program is essential in recruiting top-tier talent who will contribute to your company’s growth and profitability. A well-designed and implemented executive benefits program provides incentives that help attract new executives and retain talent over time.
We design, implement, and administer executive benefit plans that enable you to selectively reward key employees and top executives of your business. Our cost-efficient executive benefit plans supplement qualified retirement and group insurance plans that may be restrictive in nature. Our programs are designed to help meet the personal needs and goals of executives within the context of the overall corporate financial goals of your business.
Employee stock options and programs like 401(k) plans are a good start, but they may not meet the financial expectations of the most talented executives. Our belief is that executive employees want to enjoy a rewarding retirement by establishing sound financial options early on. We consistently strive to be chosen as trusted corporate advisors for carefully evaluating costs and benefits, while continuously exploring additional possibilities for better programs to help executives achieve their financial goals.
Beyond the 401(k)
For many executives, the annual investment limit in a 401(k) plan may be too restrictive. Deferring compensation can be a solution to limitations in traditional qualified plans, such as the 401(k). Nonqualified deferred compensation plans allow deferral of various forms of pay, including base, bonus, commissions, and special incentives, without the cap on the dollar amount saved or contributed. This opportunity may make it easier for executives to pay for other important expenses, such as tuition payments or the purchase of a home.
Including Performance Pay and Incentives in Disability Programs
In an era that has emphasized stock options and bonus compensation, executives may find their performance pay is not part of their current supplemental disability equation. Highly compensated employees usually fall short in plans designed to deliver a percentage of base pay “only” as disability benefits, even if income is tax-free. This is simply because of the disproportionate amount of total compensation arising from incentives, bonuses, stock options, and other forms of contingent compensation. Therefore, supplemental disability plans can be designed to give executives the opportunity to cover these other sources of compensation.
Supplemental Executive Retirement Plans
Supplemental Executive Retirement Plans (SERPs) help solve challenges with retention and motivation, helping retain and reward executives critical to the continuity of your company’s success. SERPs are a viable and popular alternative for top long-term executives concerned about the concentration of their post-retirement wealth in stock options. Although not without risks, a SERP may permit executives to self-direct the return on their account balances.
The Challenge
Business owners and key employees are finding it more difficult to adequately save for retirement. Why? Qualified retirement plans and group insurance plans, even Social Security, place limits on contributions, layouts and tax advantages of benefits for highly-paid individuals. Industry retirement experts suggest we need at least 80% of pre-retirement income to maintain our current standard of living in retirement.
The Income Gap
With qualified plans and Social Security alone, you and your key employees could receive as little as 30% of your current income at retirement – creating a retirement income gap.
This information is from the John Hancock Life Insurance Company (U.S.A.). It is intended to demonstrate the potential impact of Social Security and 401(k) plan benefits at various income levels. For more information on your individual circumstances, please speak to your financial professional.
