As we often say, an executive’s life is dominated mainly by taking care of what is both urgent and essential at work, followed closely by the even more pressing needs of one’s family. Where does understanding the intricacies of one’s company benefits fall in the long line of critical things to do? Likely so, usually near the bottom. That is where a skilled and committed financial planning team can help. From the tools that we have developed, we track the minutiae of our clients’ compensation and benefits so that they can tend to the more important things at work and in their homes. We call it our benefits grid.
What sorts of things are in our benefits grid, you ask? Well, since we consider this information part of our “secret sauce,” we will not give it all away. But we do have thirteen separate benefits categories with anywhere from ten to twenty subcategories for each of seven different companies. We’ll let you do the math on that one.
In a new relationship with an executive client, there are two possibilities: either the client’s company is completely new to us, or we have other clients at the same company. In the first scenario, we endeavor to ask for benefits information only once. We codify all sources of information into our benefits grid and refer to it often. In the second scenario, where we have other clients at the same company, we have already grasped the benefits, and we simply refer to the knowledge we already have regarding benefits. In this case, all we ask for are client specific documents like award agreements, the client’s contribution percentage to retirement accounts, etc.
The following are some examples of the kinds of information we track and how it helps us when we work with our clients.
First, there are many static elements of a benefits package. And when we say “static,” this is what we mean: the machinery of the benefits package – the stuff that doesn’t generally change year-to-year aside from periodic updates. Here are some examples:
- Does the 401k have an employer match? If so, how much?
- Does the 401k offer a Roth option? If so, is our client utilizing the Roth option?
- What are the vesting periods for Non-Qualified Stock Options? What about Restricted Stock Units? Performance Stock Units?
- Does this company require our client to always maintain a certain amount of stock ownership? If so, what is that amount?
- On this topic, we might even have an entirely separate tracking mechanism we maintain for each client. Please do reach out if you have such requirements.
- What is the life insurance offering?
- Does the medical plan offer an HSA?
There are other pieces of the puzzle that are more dynamic – they may require our attention every year. In these cases, we consider it our duty to ensure these important dates are on our calendar and we are reaching out to proactively discuss the options and provide our recommendations. This might include:
- Blackout dates from which our executive client is barred from trading in company stock – these dates usually shift from year to year based on the company’s earnings schedule.
- Deferred compensation elections
- How much can our client defer this year?
- What elements of compensation can be deferred?
- Does it make sense in the scope of a client’s full financial picture to defer compensation this year?
- If elements of equity compensation can be deferred, does this help our client meet their stock ownership requirement?
This is a lot of information to track for our client companies, so how do we do it? Well, in best case scenarios, we develop relationships with the Human Resources, Compensation, and Benefits departments at our client’s employer company with the express authorization of our client. Our goal is for the folks in these departments to enjoy hearing from us – we hope to make their job easier by becoming as knowledgeable as we can be and providing a two-way street of information. If we do not foster this kind of relationship, we have the potential of creating more work for our own client by sending our questions through them to a myriad of different people, and that can get old fast.
After our clients realize we have skilled knowledge of their benefits, they become conditioned to forward all updates from HR directly to our inboxes. It keeps us in the loop and our clients know that we will keep track of that information and bring it up with them if and when we deem necessary. It is truly a win-win for all of us. In addition, once word gets out that our team has knows the compensation and benefits system, our clients begin to refer us to their peers. In other words, those referrals already know that they need to invest no time educating us. In fact, we end up educating them and providing some third-party wisdom along with our knowledge.
Here’s the final reason we’ll share around why we developed our benefits grid: human memory is fallible. We cannot all possess a thorough knowledge of the benefits of seven major public and private companies. We can, however, create a superb index for ourselves that is easy to understand and easy for us to reference when we get on the phone with a client. Work smarter, not harder.