The Wall Street Journal produced a helpful guide entitled, How to Choose a Financial Planner in which the author offers this advice: “Consider the planner’s pay structure. A planner who earns money based on commission rather than a flat, hourly rate could have an incentive to steer you in a particular direction.”
In general, the subject of financial planning confuses many people because you don’t necessarily know what it entails, how to verify the advice, and from whom you should seek it.
The advisors at My Financial Coach caution every corporate executive or employee with large or small asset positions to follow these guidelines when reaching out to a financial planner:
Financial planning follows a rigorous process; do not think of it as a finite product. It is the long-term method of wisely managing your finances to achieve goals and fulfill dreams while, at the same time, navigating the financial barriers that appear in every stage of life.
To create a sound financial plan, life goals for yourself and your family come first. Then, your financial advisor needs to you share significant data to analyze and evaluate your financial status.
Once complete, your plan moves into development and implementation. All the while, your advisor carefully monitors the plan, ensuring you reach goals, making necessary adjustments in response to changing circumstances.
The growth in employer-sponsored financial planning programs stems from the changing nature of employee benefit programs. Today, employees are given more choices and fewer guarantees than a decade ago.
Simply put, employers moved away from the traditional caretaker role as semi-providers of financial security.
Instead, employees have had to assume more and more responsibility for managing their benefits, if they hope to achieve future financial goals. Consider the widespread move from traditional pension plans to 401(k) plans where the employee manages his or her retirement savings.
Key employees, those with exceptional talent to contribute, face unique financial planning challenges. Their financial positions are so closely tied to the success of their employers that keeping their personal financial futures separate from their employers’ financial futures create difficulties.
For example, a growing number of executives and key employees participate in stock programs from options to restricted shares. Additionally, employers are opening eligibility in their nonqualified deferred compensation (NQDC) plans to employees earning $150,000 and more. These programs bring more complexity to the planning process.
Do not overlook meticulous coordination of employee personal assets and financial goals with company benefits. Most advisors and traditional financial firms do not possess this unique expertise.
Those experts who specialize in working with corporate executives understand corporate programs; they know how to create plans that help ensure the executive’s long-term financial security. My Financial Coach gives access to both benefits experts, financial coaches, and Certified Financial Planner® Professionals.
Why Certified Financial Planner® ProfessionalsCFP® professionals dedicate themselves to improving the financial profile of individuals, families, and businesses through a rigorous financial planning process. Most CFP® professionals earn an undergraduate degree in a finance-related field and engage in continuing education courses in financial planning approved by CFP Board. To earn the prestigious CFP® certification, and remain certified as a CFP professional, individuals must meet four main requirements:
Examination: Those who aspire to CFP® status must complete the CFP Board’s comprehensive certification examination, which tests an individual’s knowledge on a range of financial planning aspects.
Experience: CFP® professionals must acquire three years of financial planning-related experience before granted the right to use the CFP certification marks.
Ethics: CFP® professionals must voluntarily ascribe to CFP Board’s Code of Ethics and additional requirements as mandated. CFP practitioners who violate the code can be disciplined, including permanent loss of the right to use the CFP certification marks.
Education: CFP® professionals must complete 30 hours of continuing education every two years to stay current in financial planning knowledge and ethics.
Effective financial planning enhances employee productivity, focus and helps create a company culture where the workforce experiences lower stress levels over personal finances. The impact on key talent results in greater freedom to concentrate on driving the goals of the business.
A well-designed financial planning benefit augments the impact of your human resources department because it enables HR pros to speak authentically about the true value of the company’s benefits program. In turn, that awareness results in stronger employee retention rates.
Most major companies recognize the benefits of financial education for their employees. Indeed, smaller organizations now offer these benefits as magnets to better compete for talent in a limited pool.
Communications conglomerate Cox Enterprises provides employees with free access to one-on-one phone consultations with money coaches to discuss everything from debt counseling and retirement planning to budgeting, and student loans, explains Elizabeth Olmstead, senior manager of public relations. A “Know Your Numbers” initiative provides a personal retirement readiness statement to eligible Cox employees to help them stay on track in their effort to save for a comfortable retirement.
Benefit programs like this one, along with many others, lead to higher employee participation rates in retirement savings plans. “Management cares about these programs and helps drive them as educational tools for employees to understand and utilize their benefits,” says Olmstead.
“Of course, for most people, life goes on long past retirement, several decades or more. Former employees still need help to manage finances in this third act of life,” says William L. MacDonald, Chairman of My Financial Coach. “Because of this reality, it is critical to understand and master the interplay of forces between corporate benefits and personal assets.”
Also, it’s fair to say that few retirement planners take the time to build any depth of experience in the delicate balance between their client’s corporate benefits and personal assets.
When company management decides to establish a new or expand an existing benefits program, it must think in far broader terms than ever before—not only how to offer the right benefit mix of desirable benefits, but also to clearly define eligible participants and how far to extend eligibility to include full workforce participation.
Too often, companies offer enhanced benefits to those only in the top echelons. A company might spend an average of $10,000 to $15,000 per year per executive. However, we believe it is time to consider one level down; their contributions may be significant and overlooked. They need financial planning help, too.
A well-designed financial planning benefit augments the impact of your human resources department because it enables HR pros to speak authentically about the true value of the company’s benefits program. In turn, that awareness results in stronger employee retention rates.
Most major companies recognize the benefits of financial education for their employees. Indeed, smaller organizations now offer these benefits as magnets to better compete for talent in a limited pool.
Communications conglomerate Cox Enterprises provides employees with free access to one-on-one phone consultations with money coaches to discuss everything from debt counseling and retirement planning to budgeting, and student loans, explains Elizabeth Olmstead, senior manager of public relations. A “Know Your Numbers” initiative provides a personal retirement readiness statement to eligible Cox employees to help them stay on track in their effort to save for a comfortable retirement.
Benefit programs like this one, along with many others, lead to higher employee participation rates in retirement savings plans. “Management cares about these programs and helps drive them as educational tools for employees to understand and utilize their benefits,” says Olmstead.
As reported recently in Forbes, “According to the 1,600 full-time employees surveyed in PwC’s 2017 study, 53 percent of workers report being stressed about their finances, while 65 percent of Millennials said the same. Across all generations — Millennials, Gen X, and Baby Boomers — financial matters were the top cause of stress. Forty-six percent of workers spend three hours or more during the work week thinking about or dealing with financial issues, and 47 percent said their finance-related stress has increased over the last 12 months.”
Many companies give executives a dollar amount benefit for financial planning. As a result, executives or employees hire a fee-based planner who takes the $10,000 to $15,000 in financial planning benefit, then ends up selling products or managing money to earn additional compensation.
If the company selects the plan, it should unbundle the financial planning benefit. If the company gives the executive the financial planning benefit directly, the executive should redirect his or her benefit to an unbiased source of advice.
You do not want to go with straight fee-only planners; they do not have the same experience as the fee-based planner who manages money, and they do not understand corporate benefits.
MFC recommends employers, executives or key employees to use their financial planning benefit from the total benefits package but unbundle it to hire a financial coach for $500, then the MFC coach becomes the second opinion with unbiased advice to build out the plan, backed by subject-matter experts to implement.
The C-suite stands to gain from consulting with an unbiased financial coach because he or she is not incentivized by commission-based product sales. Most corporate financial planners are fee-based, which means they also sell products and manage money to earn their compensation.
By taking a small portion of those corporate benefit dollars from the financial planning segment to hire a financial coach, you automatically create the quality of objectivity so vital to your financial-wellness planning process.