LIDO INSIGHTS | Don’t Leave Your Finances to Chance: What C-Suite Executives Should Do To Prepare For a Post-COVID Economy | May 2021
By: Colin Grover, CFP®
C-Suite Executives have much to plan to prepare for a post-COVID world. Thanks to hybrid working arrangements, technology is allowing more productivity than ever believed possible even five years ago. A new presidential administration and many factors are top of mind for every executive to prepare for into 2022. What about the personal finance aspect to a post-COVID world? Many executives do not spend quite as much attention on their personal budget as they should.
Confirm that you are familiar with the risk in your portfolio
First, attend to underlying portfolio risk. Recent volatility and all-time market highs have impacted most asset allocations. An imminent change is not certain, but as the market continues to evaluate our recovery success post-COVID, we must prepare for continuing volatility and shifting risk/return.
Reevaluate stock option plan and benefits
Review your current equity compensation plan: Beyond your goals and plans, your company’s equity compensation plan — and potential changes or thresholds — should also be part of your review. Do not forget to take a close look at open enrollment options.
With details of feasible tax legislation changing by the day, this will be a year to remain tuned to concrete developments. Avoid making rash decisions based on conjecture. However, as talks continue, knowing implications and handling income and deductions over the coming years could make a sizeable difference in your tax situation. Members of the government and Congress are reportedly evaluating basically all earnings raisers to offset increased shortages. Income taxes, estate taxes, capital gains, carried interest, and corporate taxation are all on the table.
What is your investment strategy?
With yields close to zero, and probably to remain at the level to 2022, it is important to maintain a prudent money management strategy. Evaluate cash needs relative to short- and intermediate-term needs to determine proper levels. It is important to work with a wealth manager that can evaluate your portfolio as a fiduciary and provide access to the entire universe of investments.
Review insurance coverages.
Together with record-low returns, dividend crediting rates on whole life policies might be negatively affected. Without appropriate management, this tendency could place certain policies in danger of lapse over time. Reviewing your policies today and developing a plan to protect your coverage allows time to make suitable changes. It’s important to check whether the present structure remains appropriate for your situation too.
Legacy/family education plan.
Developing a proper plan to bring the upcoming generations into the fold is not only a fantastic complement to sound financial planning, but crucial to its implementation. Developing the next generation to function as sound stewards of your heritage is a high-impact activity that magnifies the benefits of sensible wealth preparation.
Review your estate plan.
2020 highlighted the importance of planning for the unknown, which lesson extends to your estate plan. Review the key tenets of your strategy and confirm that they still align with your wishes.
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