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The need for impartial financial advice

The demands made of senior executives by markets and shareholders alike place ever-increasing emphasis upon relative individual and corporate performance. The inevitable consequence of this is that an even greater proportion of the senior executive�s time has to be devoted to business matters, with the result that personal financial management is often neglected.

Many senior executives have a good working knowledge of personal financial matters. However, it is exceptionally rare for these individuals to be able to devote sufficient time to gain a full understanding of the subject: to keep up-to-date with best practice; to gain sufficient experience of the more esoteric areas of personal finances; to identify the full range of products available and to understand which to use in which circumstances. As a result, even if they take decisions that are technically appropriate, it is unlikely that this will be done within a structured framework relating those decisions to clear aims and objectives.

Executive remuneration packages are already complex, with a considerable array of different benefits potentially available. This situation will be accentuated by the current Inland Revenue pension proposals and the result is that the real benefits of an executive's reward package are often not fully exploited.

How we can help

Our team of experienced consultants work with executives from many of the UK�s leading organisations, helping them to maximise the benefits from their reward package with minimum effort on their part. In turn this frees them to concentrate their efforts on company business.

Our comprehensive service begins with a detailed investigation to help us understand the executive�s background and circumstances, their short-, medium- and long-term needs and objectives, and their risk tolerance. From this we will prepare a detailed report confirming the results of our analysis and setting out our recommendations. Once agreed, we will work with the executive to implement the recommendations and agree a monitoring programme and basis of ongoing advice.

Impartial advice underlined by our charging structure

Most independent financial advisers continue to work on a commission basis. As a result, their remuneration is totally dependent upon the establishment of commission generating products on a client�s behalf. We feel this could undermine the impartiality of advice, the depth of detail covered and the individual�s perception of the benefit being provided.

Our basis of operation is therefore to charge fees for the provision of advice, which can then be clearly seen to be wholly impartial. Commission payable is normally reinvested in the product or offset against fees.

Our charges for initial and ongoing financial consultancy and advice are calculated with reference to: the time spent on the project; the importance, complexity and urgency of the work; and the value of the knowledge and skills applied in the context of the particular assignment.

Cost management

Naturally, we recognise that companies may consider it inappropriate for them to underwrite fully the costs of the individual consulting services. Therefore, we will operate on the basis that ceiling fees are imposed, with an individual executive responsible for fees in respect of any work that they require undertaken beyond the service underwritten by the company.

The range of issues we cover with executives depends on individual circumstances, but may include:

past and future pension provision, including a review of the possible impact of the inland revenue pension simplification proposals

retirement planning, including pension fund withdrawal and phased retirement

over the cap earnings � UURBS, FURBS and salary supplement

incentive schemes � tax effective share option exercise

personal taxation � income and capital gains tax planning

investment strategy � asset allocation, tax-efficient investment and so on

expatriation (UK issues only) � non UK advice is available through local contacts worldwide

family financial protection � death and disability cover

inheritance tax planning � use of exemptions, death in service benefits and gifts

wills and trusts � threshold strategy and settlements.

Further information

For further information on how your organisation and its executives can benefit from our executive financial consulting services, please contact your Watson Wyatt consultant. Alternatively, please email Mick Calvert or call +44 (0) 20 7222 8033.