Ask an Adviser: How can nonqualified plans help retain c-suite talent?

Welcome to Ask an Adviser, EBN’s new weekly column in which benefit brokers and advisers answer (anonymous) queries sent in by our readers. Looking for some expert advice? Please submit your questions to askanadviser@arizent.com.

This week, we asked Michael Ritz, a relationship manager with Lenox Advisors, to weigh in on the following: How can nonqualified plans be leveraged to attract and retain top talent in the c-suite, especially in this tight labor market?

HR departments are stuck in the middle of two trends: a very competitive job market and the ever-increasing cost of employee benefits, exacerbated by the pandemic.

While much of the Great Resignation’s focus has been on lower-level employees in the service industry, a recent survey suggested that nearly half of the job vacancies are at the manager and director level. It’s also worth noting that more than 60% of those responding to another recent study cited the total benefits package as a key consideration for job seekers, almost as important as salary (74%).

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So how do companies ensure that their most valuable assets — top executives — feel rewarded, valued and motivated? By creating a well-rounded executive benefits program that offers not only robust health benefits but also provides meaningful solutions for financial health.

Research suggests that employees are less productive when concerned about their family’s finances. This may be even more true for top executives, who are not typically well-served by traditional corporate group benefits that are capped at levels far below the needs of people in the c-suite.

Apart from group term, universal and whole life plans, supplemental disability and long-term care insurance, non-qualified plans provide a way that key executives can contribute more toward their retirement assets beyond the constraints of 401(k) limits. Examples include deferred compensation, executive bonuses, split-dollar plans and group carve-outs for which companies can implement various life insurance solutions.

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The key benefit of these nonqualified plans to executives? Monies are deferred to retirement when they will likely be in a lower tax bracket. Advantage to the employer? C-suite retention, especially at a time when organizations need steady leadership to help win the talent war and grow their business. Overall, well-conceived and comprehensive benefits provide security to executives beyond typical health and retirement plans. They also can help differentiate the company and attract stronger applicants.

Along the ever-changing corporate landscape, it is important to stay abreast of trends, especially among competitors in your industry. Benefits such as these will not necessarily have a large impact on your budget. What’s critical is to consult with an expert that has the resources and relationships to design and implement your plan, assist with enrollment and service the needs of your top executives.