Financial Fitness Strategies for Executives

Sponsored by BFB Gallagher

As tax day approaches, I’m getting crankier by the minute. With several tax seasons under my belt (let’s say at least 20 and leave it at that), this time of year and all that it entails shouldn’t be a surprise, yet it is. Not surprisingly, money is the number one source of stress for American adults, with 72 percent feeling stressed about money at least some of the time.

To add to my sense of tax-time dread, my small stack of retirement account statements is forcing me to think critically about my golden years. When my parents were planning for retirement, their main considerations were “where in Florida should we live?” and “how big of a boat can we buy?” Today, my retirement planning is reduced to simply “if and when.” Apparently I’m not the only one reaching for relief. According to the Employee Benefit Research Institute’s Retirement Confidence Survey, three in 10 workers (31 percent) report that they feel stressed about preparing for retirement.

Effect of Financial Stress on Workforce

Financial stress can take a heavy toll on your employees, affecting their physical and emotional well-being while also impacting their ability to remain engaged and deliver on job responsibilities. Your employees’ high level of stress is impacting your credit union’s bottom line in a variety of ways (according to a report from Arthur J. Gallagher & Co.):

• higher compensation costs due to delayed retirement;
• higher healthcare costs from stressed employees whose chronic conditions do not improve, and an aging workforce;
• higher workers’ compensation and disability claims as employees reach retirement age; and
• increased absenteeism due to serious illnesses and chronic conditions, leading to lower productivity.

Focus on Achieving Goals, Not Filling Vacancies

Credit union executives feel financial pressure too. Your executives’ impact on your organization is even greater and more difficult and costly to replace. Credit unions are highly motivated to retain their top-performing executives for several reasons:

• to foster long-term return on investment;
• to ensure strategic vision is advanced and uninterrupted;
• to maintain stronger connection to the membership and other constituents; and
• to keep institutional knowledge in-house.

Fitness Strategy #1—Leadership Benefits

Adding leadership benefits to your executive benefit plan helps boost the overall value to the executive and helps them confidently achieve their financial goals. The contributions of a board of directors can be recognized as well, especially as regulatory compliance becomes increasingly complicated and personal liability grows. Leadership benefits include:

• medical reimbursement plan;
• individual disability coverage;
• long term care insurance;
• medical supplement and Medicare Part D prescription drug plans;
• cancer/critical illness insurance; and
• liability umbrella.

Fitness Strategy #2—Financial Planning

Due to complicated retirement plans and tax codes, credit union executives face certain challenges to ensure all of their benefits from various sources work together to create the retirement they envisioned.

Your executives have complex financial lives which require specialized strategies. Financial planning provides a roadmap for who, what, where and when—providing a tangible take-away of their benefits package. A comprehensive plan has six key elements:

• cash flow analysis;
• investment and portfolio analysis;
• retirement income analysis;
• tax planning strategy;
• risk analysis; and
• estate planning.

Getting Started

Since I’m occupied doing my taxes right up until the deadline (yes, I’m one of those people racing to the post office at midnight), let me recommend two experts to provide details and help you get started. A recording of a recent webinar “Financial Fitness Strategies for Executives” is available online. In the webinar, my colleague Kathy Lewis (Gallagher Benefit Services) explains the eligibility, taxation and pricing for leadership benefits. Then Doug English (ACT Advisors) expands on the key elements of financial planning and how to pull it all together. Check out the recording and let me know what you think.

Plus, the BFB Gallagher consultants are hosting small lunch and learn events across the country (after tax day, of course). If you’re in the Dallas area on May 11, join us for an executive luncheon in the Dallas Cowboys Locker Room.

BFB Gallagher, Charlotte, N.C., consults on executive benefits, benefit liability management and institutional asset management. We provide credit unions with solutions for recruiting, rewarding and retaining talented executives, including innovative methods for offsetting those costs. BFB designs, implements and services your plans for the life of the account. Our customized solutions ensure federal and state regulatory compliance in meeting your specific needs, from board education and design to implementation and administration. BFB’s proprietary online portal provides clients and participants with account access, on-demand reports, accounting entries and more. View educational resources and register for upcoming webinars at www.BFBbenefit.com.