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What benefits can I carve out for my Top Employees?


Background

John is a successful business owner of a consulting firm, a highly competitive field where his top talent not only help make his clients successful, but they drive the revenue success of his organization.

Challenge

John realized that the top 20% of his consultants created 80% of his revenues and he did not want to lose his top talent.  He worked hard on company culture and was looking to augment this with a creative and captivating program for his top talent. He wanted a program that would ‘ignite the fire’ for all associates with the desire to join the ranks of his top players.

Stated desires for the program:

  1. Contribution Flexibility – business revenues cycle with the economy – strong today but in 2009...
  2. Incentive Based – when metrics are hit, the employee should accumulate rewards towards their future benefit.
  3. Control - John would maintain control and could put his own parameters in the agreement.
  4. Avoid taxation during the ‘growth’ phase.
  5. Reimbursement of cost – John wanted, if possible, to get his ‘money back’ that he contributed to the program.

The Strategist’s Recommendations

  1. Establish an understanding of what drove these employees and identify common threads.
    1. For many, although earning well into the mid six-figures, they did not have peace of mind about “retirement”.
    2. They worried about the care of their loved ones.
  2. Identify clear employee metrics that drove company revenues.
  3. Identify participation criteria and how to ‘cap’ for the future benefit.
  4. Identify the funds John was willing to contribute to the program.
  5. Clearly outline the program roll-out and on-going communication.
  6. Implementation

Implementation

We identified the best fit for his business would be the creation of an incentive-based Defined Benefit program. The solution, a Supplemental Employee Retirement Plan using strategically structured life insurance policies as the underlying asset. Using key performance metrics, we identified a track for all employees, to be able to create for themselves or their beneficiaries a “$1M” pension-like payout during retirement.

Results

When the program was rolled out to top hat employees, there were gasps and tears as employees thanked John for taking such great care of them and their families.

He continues to share reports during their annual review covering what they have already earned towards their future benefit. John said that now that their “$1M Payout Program” has been in place for a few years, the employees look forward to the reports. They see the benefit and continually express their gratitude.

Side note: John shared that not once did he receive a thank you for the 401k match he previously had in place using these same funds.

Check the background of this advisor on FINRA’s BrokerCheck.