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When it comes to funding an executive benefits plan, choosing the right investment for the right person and your credit union means knowing both the needs of your executive and your organization’s risk tolerance, says Ramsay Ellis, executive benefits specialist with CUESolutions Platinum provider CUNA Mutual Group, Madison, Wisconsin.

Knowing your executive and your organization might be the easy part. Comparing various plans and funding sources can be tricky because various providers represent rates and returns in somewhat different ways, Ellis explains. 

Rates and returns are key things to try to compare benefits plans and funding investments “apple to-apples.” A second key consideration for making a good comparison of plans on an equal basis is overall expenses associated with a particular investment account.

“The fee that’s being charged in a managed account is charged quarterly and is very transparent,” Ellis explained. “You see it coming out of the account and know exactly what the charge is, down to the penny.  

“Where it can get fuzzy is the use of mutual funds, exchange traded funds,” he continues. “Those are types of investments that have internal fees and costs that are not transparent. … If the mutual fund charges 1% a year, they’ll take 1/365th of 1% out of the value of the account every day.”

Ellis says he has seen credit unions mutual funds and exchange traded funds inside of a managed account with a 1% wrap fee. “When you look at a managed account charging a wrap fee that also holds investments that have internal expenses—such as an exchange traded fund or other type of mutual fund, in reality you’re paying two levels of expense.”

The show also gets into:

  • What permanent whole life insurance is, and why it's commonly used for split-dollar life insurance plan
  • How providers illustrate their executive benefits plans
  • Who at a credit union gets most involved in sorting out the finer details of executive benefits plans
  • What other expenses credit unions might want to look for when setting up an executive benefits plans
  • What executives besides the CEO a CU might want to put an executive benefits plan in place for—and why they might want to do this
  • How plans for a CEO and other executives might be different
  • When to use a split-dollar plan and when to use a 457(f) plan


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