Strategic advice for busy executives
A successful and demanding career as an executive can often lead to your own finances being neglected, important decisions being rushed and overlooking paperwork. Unfortunately, this can have long-term consequences ― particularly around investment decisions and financial strategies that can be difficult to exit, or make you feel locked into your high-income, high-pressure job.
It’s also not uncommon that for many busy executives ― despite an enviable salary ― the responsibilities, long hours and stress that go with the job can often take their toll and may force a career change or drive an early retirement. Considering this possibility, the key is to establish the right framework for your finances and develop a plan that is flexible enough to adapt to changes in your circumstances.
Our strategic financial advisers have helped many executives and senior professionals in the private sector and public service navigate complex financial decisions and career transitions. Importantly, guidance from a specialist financial adviser can remove the stress of financial planning, save you time and help you avoid common pitfalls.
Here are some financial planning areas worth considering:
Set the foundations
With executive income usually falling within higher tax brackets, personal investments must work that much harder to achieve the same return as someone on an average income. Effectively structuring your debt, income and assets earlier to optimise tax outcomes, asset protection and future income requirements can help you avoid costly adjustments in future. You should be particularly mindful of entering inflexible and overly complex financial and investment strategies that lock you into your high income.
Make the most of your strong earnings potential
Busy executives can fall into the trap of letting surplus income get eaten up unnecessarily. Often it can be because they’re paying too much for debt arrangements, paying high fees because they’re not in the right products, have products that overlap, or, they’re not taking advantage of available tax concessions. Knowing where to direct surplus income in light of economic conditions and your stage in life, can help make sure your income is working as hard as you are.
Super still makes sense
Even in the current environment, superannuation remains one of the most tax-effective ways to save for retirement. And although, as a highly paid executive, your superannuation guarantee may use up your concessional contribution limit, there are other ways to build wealth through super strategies which can provide a significant boost to your final retirement savings balance. One example of this is if your spouse isn’t earning as much as you, they may have less super and this could be utilised to your advantage ― if you’re willing to work together to build super as a couple.
Hold some investments outside of super
If you’re worried about not having access to super under an early retirement ― or perhaps you’ve already got over $1.6 million in super and can’t make any non-concessional contributions ― building wealth outside of super could mean continuity of income, which may be critical if you do need to make a career change or retire early. How you structure these investments – in your personal name, joint names with a partner, trust or company – should be carefully considered and planned out as each of these structures may have different tax arrangements.
Protect your legacy and estate plan
The demands and responsibilities of an executive role can often mean this important area is ignored or pushed lower on the priority list. While planning for the distribution of your wealth can be complex, it is a necessary component of financial planning. Estate planning isn’t just about doing a will, especially if you have beneficiaries, a blended family or complex structures such as trusts and companies. Importantly, superannuation doesn’t ordinarily form part of your estate but given it can be one of your biggest assets in retirement, having the correct documents and nominations in place is critical to ensuring it is passed on seamlessly and tax effectively.
Engage a specialist financial adviser
Partnering with an experienced financial adviser can help you navigate the key financial planning areas with greater confidence. They can help you understand your goals and develop a clear plan that works towards your priorities with ongoing support if needed. Importantly, having dedicated support from a trusted adviser can alleviate pressure and save you time so you can focus on what’s important to you.
Find out how we can help you by talking to a financial adviser.