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Wealth Control Advisors, LLC
60 William Street, Suite 200
Wellesley, MA 02481
781-235-8891 MA telephone
781-235-8890 private fax
866-235-8991 outside Mass.
10781 Waterford Place
West Palm Beach, FL 33412
561-691-1380 FL telephone
info@wealthcontrol.com
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Case Study 3: New Key Manager at Company
A client, whom we have worked with for 20 years, recently hired a new key sales manager for their retail business. The client knew that in order to grow the company it would take a more aggressive approach to generating new clients and new revenue. At the same time, the client realized that an incentive plan would need to be developed. The incentive that was created for the new key employee was a 10-year plan to provide him personal equity in the firm, assuming sales growth hit attainable financial targets. In discussing the plan, we discovered a flaw in the new compensation arrangement which, if the sales manager died or left the firm, the owner would have to continue to cover the overhead for the compensation plan in spite of the loss of the of the key employee.
We suggested and the business owner implemented two life insurance polices. (See Key Employee Benefits & Nonqualified Deferred Compensation Plans)
- First, a life insurance policy which pays a death benefit to the business for the economic loss that occurs if the key employee dies since that employee is critical to the ongoing success and profitability of the business.
- Second, a personal life insurance policy owned by the employee but paid for the business was purchased as a benefit bonus. The employee’s spouse is named as the beneficiary, and thus helping protect the sales manager’s family finances.
Once this was in place, the sales manager and I met again and Wealth Control Advisors, LLC was hired to determine if his current financial wealth planning strategies were in place, if he was on target to reach financial independence by 60-65 years of age, and if his assets and plans were owned and structured properly. (See Ongoing Management Of Total Wealth and Personal Financial Planning For Senior Executives, where we performed a Life Insurance Survival Audit, a Disability Contingency Planning & Audit, and collaborated with their tax and accounting advisors).
In reviewing his entire past planning, we discovered that like many busy executives (who had complex lives) he spent first and never really saved enough to reach specific financial goals because he had never defined those goals. The sales manger’s wife actively participated and she had some of the same dilemmas that her husband had.
The results of our joint efforts were:
- That they were not previously saving enough for retirement independence, and they now have a monthly allocation to that defined target.
- They both added income protection (disability insurance) to protect the maximum available as they were far under insured, including insuring their retirement contributions and 401K match from their respective employers.
- They discovered that the husband (sales manager) was paying for life policies that were surcharged due to his prior (but not current) smoker status and had further excess ratings due to a prior health problem, and we were able to rewrite the plans without any excess surcharges, plus design them for permanent maintenance not temporary coverage.
- We brought them to an estate-planning attorney (as they had very old one-page wills that no longer met their needs) to develop and complete a Charitable and Estate Plan.
- Finally we brought them to a new CPA to help them with future income tax planning as their income will be increasing dramatically over the coming years.
They commented that the other advisors they worked with had never looked at all of their planning and products at one time, and had never worked in a joint or collaborative effort. They were extremely pleased that we brought them integrated planning solutions on and were excited to work continually with us on an ongoing basis.
You can read about our comprehensive Tailored Services, Our Clients, or How We Work, or Contact us to get started today.
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