3 minutes
Proactively manage executive benefits to avoid future surprises. Learn why transparency is key in today’s evolving market.
As not-for-profit organizations strive to attract and retain top talent, offering competitive benefits packages is essential. However, in the current climate of higher interest rates and evolving projections, transparency becomes paramount.
The Importance of Executive Benefits
Executive benefits play a crucial role in attracting and retaining high-caliber leaders. These packages often include a combination of salary, bonuses, stock options, split-dollar life insurance plans and other incentives designed to reward performance and loyalty. In a competitive job market, comprehensive benefits can make the difference between securing a top executive and losing them to a competitor.
However, the structure and communication of these benefits need to be clear and transparent. Executives must understand the full value of their compensation packages and how they align with their organization’s long-term goals.
The Role of Projections
Accurate projections are vital in designing effective executive benefits packages. These projections help both the organization and its executives understand the potential future value of their compensation. However, in times of economic uncertainty, projections can be volatile.
Like most life insurance policies, which are often bought (and sold) with the “set it and forget it” mentality, split-dollar life insurance plans can be impacted, sometimes negatively, by interest rates.
The illustration you saw when you bought the policy is based on the market environment and corresponding interest rates available at that time. As interest rates ebb and flow, and policy expenses and mortality costs rise it’s likely that changes in these variables have already caused your policy to perform differently than originally expected. Depending on the length of your runway to retirement, this can lead to unwelcome surprises.
Avoid Unpleasant Surprises
The in-force illustration recasts the policy outlook, starting from its current cash value balance and using current assumptions for the interest rate and insurance costs.
Reviewing an in-force illustration will help you determine whether you need to act and what potential action is best suited to your stage in life.
Unfortunately, some executive benefits providers choose not to share in-force illustrations with their clients to avoid these difficult discussions. That’s why it’s best to be proactive and request an in-force illustration every two to three years.
Honest Conversations Now Avoid Pain Later
In a world of lower interest rates and economic uncertainty, transparency in executive benefits is more important than ever. By prioritizing clear communication and accurate projections, executive benefits providers and organizations can ensure their executives feel valued and secure in their compensation packages.
To learn more about optimizing executive benefits in today’s economic, reach out to our experts. We are here to help you navigate these challenges and design benefits packages that work for you.
David Wright is a co-founder and serves as Chief Strategy Officer with primary responsibility for strategy and business development at TriscendNP and has served in this capacity for 20 years. Areas of expertise include business development, compliance, business transactions, and financial and accounting topics. Additionally, he has over 12 years of previous experience in the health care field and has held executive positions ranging from operations to business development.
Mr. Wright holds health, life, and accident insurance licenses in multiple states. He received his Bachelor of Arts in Business Administration from Western Colorado University (where he earned All-RMAC, All-RMIGA, Mountaineer Sports Hall of Fame (team) honors in golf) and a Master of Healthcare Administration from the University of Mary Hardin-Baylor. Additionally, he received a Master of Business Administration from Colorado State University, earning Beta Gamma Sigma honors and serving on the program’s advisory council. He is also a former member of the Forbes Non-Profit Council.
