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Many insurance and financial advisors would like to better understand non-qualified deferred compensation plans.  Mastering the accounting, tax and legal issues can be daunting, not to mention the various ways these programs can be financed.  Yet the ability to do so can significantly increase a firm's prestige and role in planning among the over 10 million closely held businesses crowd.

Proper design begins with proper planning.  So at the risk of putting myself out of business, here's all you need to do.  Ask your business owner client 3 simple questions:  Who?  Gets What?  When?  That's it!  While this may sound like it comes from a Dr. Seuss book, these three questions cut to the very core of executive / key employee benefit planning.

First...who ARE my key people?  Let's really identify those whom we want to retain and reward for the success of the organization.  This exercise is quite often not so obvious and simple.

Next...What should they Get?   A lump sum amount or a series of payments?  Do employees contribute to the plan or just the employer?  How do you determine how much to receive...a specified amount or an account balance?  What's the interest crediting rate and how is it determined?

Finally...When?  An incentive bonus after a few years?  A retirement payout?  Benefits upon death or disability?  What about a vesting schedule?  A lot of possibilities to consider.

So maybe there is a role for me after all.  As a trusted advisor to a closely held business owner, you've already achieved the toughest part of the transaction...establishing the relationship.  Why waste time, energy and money to learn an expertise that you can outsource, or worse, do incorrectly and risk the relationship you've built.

While it's not rocket science, there is a lot to the proper design, implementation, funding and administration of executive benefit plans.  Enhance your practice and trust me and my over 30 years of industry experience to be your partner.  That's really everything you need to know!

Post Author: EBGUY

30+ years of helping advisors work with closely held business owners on integrated wealth planning.