The Next Successful Move for Executives:
by Sajjad Hussain

Helping senior corporate executives step smoothly into a successful, secure retirement starts long before that step unfolds. We work with clients throughout their careers, helping assess earnings risk and focusing on areas that are often overlooked. Here are four fundamentals that we believe corporate executives should follow to be ready for life’s unfolding and enjoy a smooth retirement:

Build Savings and Measure Career Risk
It may sound obvious, but the more you earn, the more you need to save to maintain your lifestyle throughout retirement. During peak earning years, focus on building up excess cash reserves, funding your RRSP, TFSA and other benefit plans as much as possible

Career risk exposure can also increase as earnings rise. Several corporate executives with whom I have worked recognized their positions at technology and consumer staples companies could be temporary. They also realized that replacing their significant salaries could be challenging. As a result, they saved as much as possible in their higher earning years. One executive was laid off and it was three years before he found a suitable position. High cash reserves and being able to access them efficiently allowed him and his family to maintain their lifestyle during that period.

Manage Deferred Compensation Plans Wisely
Senior corporate executives are often offered a variety of deferred compensation options, which allow you to specify a future date when compensation is to be paid out. In our experience, executives often randomly select payout dates without considering the tax consequences, or how the future payout date might fit into their overall retirement or future career plans. Often they receive a lump sum upon retirement or upon leaving the company. This is not always the wisest or financially optimal way to receive these funds.

By carefully selecting the timing of deferred compensation payouts, you can minimize taxes and create a smooth income flow as you transition into retirement. Ideally, you would stagger payout dates so the tax consequences are spread over multiple calendar years.

Reduce Exposure to Company Stock
Executives commonly have a disproportionate amount of their net worth tied to the stocks of the company for whom they work. Stocks may come in the form of non-qualified or incentive stock options, restricted stock units, through employer-matching contributions or an employee stock ownership plan inside the retirement plan. Some people buy more stock at a discount through an employee purchase plan. Take a step back and consider whether you really want a large portion of your net worth and future income tied to one company’s success. We recommend planning to efficiently manage company stock holdings as a percentage of your overall assets as a means of mitigating risk and allowing for a steady retirement income stream.

Seek Advice that Puts Your Priorities First
Companies will often pay for financial planning services for their senior executives. However, not all financial planning firms are created equal. For corporate executives, successfully transitioning into retirement should be a seamless process with minimal lifestyle changes. Achieving this goal requires carefully balancing different components so they work effectively in unison. We believe unbiased, goals- based planning should lead the development of a road map through retirement and drive the selection of best-matched products, services and supporting professionals.

This information, prepared by Glenn Allen who is a Portfolio Manager & Director, Private Client Group for HollisWealth® and Sajjad Hussain who is a Portfolio Manager & Director, Private Client Group for HollisWealth®, does not necessarily reflect the opinion of HollisWealth®. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Glenn Allen, Portfolio Manager & Director, Private Client Group and Sajjad Hussain, Portfolio Manager & Director, Private Client Group can open accounts only in the provinces in which they are registered. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.