HOW TO CHOOSE A WEALTH MANAGER:
TIPS FOR CORPORATE EXECUTIVES

If you have ever purchased a new car, you know there are literally thousands—if not hundreds of thousands—of options that could fit your basic needs. However, once you identify your most important needs, you can narrow your search and find a vehicle that best meets those needs. After doing that, gone are the days of heading down to your local car dealer to purchase your new car. We now have the entire country’s inventory at our fingertips through the internet.

While wealth managers are not the commodity that vehicles are, certain advisors do offer different options than others, and this should not be overlooked. Much like your search for a new car, you can easily find a financial advisor who appears to meet your planning needs via an internet search. However, it’s really crucial that you dig deeper to ensure your advisor provides the services you need and is the best fit for you and your financial goals. For this reason, we have compiled a step-by-step guide of how to choose a wealth manager, including key questions to ask and other tips for corporate executives.

Step One: Identify Your Needs

When it comes to your financial planning needs as a top-level executive, there are really four major areas to consider. Identify where these areas fit into your current financial plan, as well as any additional concerns or areas of interest you have before selecting wealth manager to address those needs.

Equity Compensation Planning

Many, if not all, executives are faced with decisions regarding compensation that is usually tied to company stock. If you have restricted stock units, non-qualified stock options, or incentive stock options in your portfolio as part of your employer’s compensation package, you need a wealth manager who specializes in equity compensation planning.

Concentrated Stock Management

When executives are compensated with company stock, their position can quickly and easily become concentrated within their overall financial portfolio. When an executive sees half or more of their portfolio concentrated into one stock (typically their own company stock), that should raise some concern. A decline in company performance could easily and drastically affect a portfolio with a concentrated position.

Charitable Gifts Planning

As an executive, you know that charities want and need your financial support, and you likely have causes you’re passionate about. If you’re looking to earmark a portion of your wealth or income for charity, it’s important to consult with an advisor who can ensure you’re using the most effective charitable giving methods. A wealth manager that specializes in charitable gifts planning can help you identify how to maximize your charitable donation while being as tax efficient as possible.

Legacy Planning

Last but certainly not least, as you’ve accumulated wealth throughout the course of your life, you ultimately want that wealth to go to specific people and places when you pass on. If you want to leave a legacy that outlives you, then working with a wealth manager who has experience in legacy and estate planning for executives can greatly benefit you and your family. An experienced advisor can help design strategies suited to your needs while working hand-in-hand with your estate planning attorney.

These are all key considerations C-suite executives should make when choosing a wealth manager. It is important to work with an established and experienced wealth manager who specializes in all of these areas of concern for executives.

Step Two: Identify a Wealth Manager Who Addresses Your Needs

Once you have identified your needs, which may easily go beyond the basic list above, seek out a wealth manager with experience and expertise in those areas of concern for you and your financial situation. It might be easy for an advisor to say he or she specializes in these particular areas. However, to identify the right advisor for you, it’s important to ask key questions and know what you’re looking for.

Below, we’ve listed key questions to ask a potential wealth manager in each of these crucial areas for executive-level financial planning. We’ve also provided some examples of how a fitting advisor might address that question and, ultimately, meet your needs in that area.

Equity Compensation Planning

When it comes to planning around your equity compensation, you should expect an experienced wealth manager to guide you in aspects such as exercising stock options and holding or selling company stock.

Key question: How do you help executives make the most informed decision when it comes to their potential equity compensation choices and outcomes?

Example: Your wealth manager should offer services like generating a report showing you all of your potential outcomes for your employee stock options and potential taxable incidents that could occur at different holding period lengths for your company stock. A proper advisor should also be able to help you determine the best entry and exit strategies when it comes to purchasing or being compensated with employee stock.

Concentrated Stock Management

Concentrated stock this is something that occurs in the portfolio of nearly any top-level executive, which means that a wealth manager who specializes in advising C-suite executives should have a grasp on how to best manage these positions.

Key question: At what point would you consider an executive to have a concentrated position, and what strategies do you employ to offset or work with a concentrated stock position?

Example: One strategy that experienced executive wealth managers will know and understand if they have spent time in this space is an exchange fund strategy. This is a high-level strategy that involves pooling your concentrated stock position into a fund with other shareholders with concentrated positions. You exchange your concentrated shares for shares of the fund, thus generating a diversified stock position from your concentrated position.

Charitable Gifts Planning

There is no doubt that executives spend a fair amount of their wealth on philanthropic endeavors. This means that your chosen wealth manager should be able to provide you with strategies and solutions that allow you to donate the largest amount possible to the charity of your choice while benefiting you equally.

Key question: If I want to give to charity, what type of strategies have you seen work well for other high-income-earners, and how can you help me maximize my charitable donations?  

Example: An experienced wealth manager should be able to show you how to donate concentrated stock to charity to maximize contributions while limiting your capital gains taxation. A donor-advised fund is another unique charitable giving strategy that often meets the needs of high-earning corporate executives. A qualified advisor should have experience in guiding clients in establishing a donor-advised fund.

Legacy Planning

This aspect of planning often goes overlooked when executives are seeking out a wealth manager, which is likely due in part to the far-off nature of leaving a legacy and planning for such. However, estate planning is a very important aspect of any executive’s financial plan, and you should certainly work with an advisor who can help you leave wealth where you want and limit the amount of taxation along the way.

Key question: When I’m gone, I want my wealth to be distributed according to my wishes, but I also want to minimize any type of taxation that could occur. What types of strategies have you helped other executives employ when it comes to leaving money to family, friends, and charity?

Example: A wealth manager experienced in working specifically with corporate executives should discuss with you legacy planning strategies that help you minimize estate tax. Methods that should be part of the discussion include gifting your stock options, employing charitable remainder trusts or charitable lead trusts, and establishing family limited partnerships.

It is also important to work with a financial advisor who sees the benefit in working hand-in-hand with your estate planning attorney of choice. Through multiple advisors, in this space, you can achieve the best possible outcome for your planning and for your family.

Step Three: Review Client Base & Credentials

One of the best ways to ensure the wealth manager you are considering works with top-level executives is to simply see who they work with. You might consider asking other executives what advisor they recommend, or even ask the potential firm to provide a top client list if it is willing to do so. It is always a good sign if the advisor has a solid clientele base of corporate executives who continue to put their trust in the firm.

Another way to distinguish wealth managers who have taken the time and energy to hone their skills is by looking at their credentials. One of the top-level credentials a wealth manager can obtain is the CERTIFIED FINANCIAL PLANNER (CFP®) designation. The CFP designation indicates that the advisor has met the professional standards set forth by the CFP Board. This means he or she has openly embraced the following principles when dealing with clients: integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence.

Key question: How do you feel your credentials and designation help you to better serve your client base?

Step Four: Consider Logistics & Trust Your Gut

Lastly, you want to work with a wealth manager who relates to you and genuinely cares about you. An advisor and the firm’s overall approach to client interaction is an important aspect in choosing a wealth manager. This should not be tossed aside as an afterthought because, ultimately, the more your advisor knows about you and your situation, the better financial recommendations he or she can make for you. Using your instinct is one of the most important aspects of choosing a wealth manager.

Key question: Here, gauge if a wealth manager is the right person you should be working with through the questions he or she asks you. Listen for questions such as:

• What is important to you?
• Tell me about your family.
• What are your long-term goals?
• What do you like to do outside of the office?

These questions show the potential wealth manager is truly interested in getting to know you and meeting your unique needs, and doesn’t plan to just implement blanket strategies that may apply to every corporate executive.

In addition, part of evaluating a potential wealth manager’s client interaction is understanding how the firm works to accommodate the extremely busy and demanding schedules executives maintain. Does the firm offer remote client meetings either over the phone or through visual conferencing, in addition to in-person meetings? When you’re working 60 hours per week, you need to know your wealth manager understands that and will work with you to make your life easier.

At the end of the day, choosing a wealth manager to pilot your financial plan is one of the most critical decisions you’ll make as a corporate executive. Ask the questions above and listen for services and strategies that are truly geared toward your needs as a high-earning individual. In doing that, you can feel confident you are working with an expert who will employ the most effective methods to help you reach your financial goals.

At the firm of Wade Carpenter and Team, we pride ourselves in going above and beyond the needs of our clients. We truly get to know you and your family, and learn about your goals as an executive and as a person. We learn what’s important to you and implement strategies around that. Reach out today for a complimentary consultation.