MICHAEL HALVORSEN, MS, CFP®, CEBS, CKA®; JOSEPH M. BATES, CFP®MRK Wealth Advisors, a wealth management firm operating exclusively in the life sciences sector and serving clients throughout the United States, understands these nuances and helps clients navigate these challenges and opportunities. MRK Wealth Advisors drives success by fully integrating an executive’s total compensation and benefits within a financial plan while working as fiduciaries on behalf of their clients.
“Our value proposition to executives in the life sciences space is the knowledge of executive compensation components, complex employee benefit plan rules and income tax planning to maximize their savings and minimize taxes,” says Michael Halvorsen, wealth advisor and managing partner.
The MRK Wealth Advisors team of specialists, comprised of CERTIFIED FINANCIAL PLANNER™ (CFP®) practitioners, Certified Employee Benefit Specialists (CEBS) and Certified Public Accountants (CPA), have served professionals from a multitude of pharmaceutical and life science companies, including Merck, Organon, BMS, JNJ, Biogen, CSL Behring, Daiichi Sankyo, LabCorp, and Medtronic. Halvorsen, a CFP® and CEBS professional with a master’s in financial planning, has been a guest speaker at numerous Merck & Co. meetings and taught over 20,000 Merck employees strategies to maximize their executive compensation and benefits.
Operating under the umbrella of Summit Financial, one of the nation’s largest registered investment advisors (RIA), MRK Wealth Advisors can utilize large firm resources and human capital while offering personalized service to clients.
Taking Up the Mantle of Financial Planning
Committed to unburdening pharma executives, the MRK Wealth Advisors team develops effective wealth-building strategies that can optimize each component of executive compensation and benefit plans.
Apart from salary and bonuses, a typical pharma executive’s compensation includes pension plans and short- and long-term incentives that consist of performance and restricted stock units and non-qualified and incentive stock options. Deferred compensation, 401(k) plans and other benefits should each be incorporated into a financial plan. Each of these components are governed by company plan rules, distribution schedules, governmental rules, all of which can result in significant cash flow and income tax ramifications that should be carefully managed. In many cases, executives have plans spanning multiple employers they have served over their careers.
Our value proposition to executives in the life sciences space is the knowledge of executive compensation components, complex employee benefit plan rules and income tax planning to maximize their savings and minimize taxes
Expert Planning Acumen in Action
The MRK Wealth Advisors team approach is a breath of fresh air in an industry where professional advice is normally investment centric.
“The cost of not navigating compensation and benefit structures or integrating tax planning is significant for life sciences executives,” says Joseph Bates, another CERTIFIED FINANCIAL PLANNER™ (CFP®) professional on the MRK Wealth Advisors team.
Therefore, the team carefully studies each pharma executive’s compensation and benefit plans while assessing their ability to implement recommendations. This in-depth analysis ensures that the distinct complexities of each client situation are fully uncovered and addressed. Understanding the client on a personal level is crucial when planning, including family dynamics, desires and goals are all important components to any plan.
The typical pharmaceutical executive engaging MRK Wealth Advisors has annual household income exceeding $750,000 and investment net worth surpassing $5 million. Improved benefit utilization and tax savings can easily help defray the costs of financial planning. Some life science firms provide cash benefits or reimbursements for financial and tax planning advice.
After undertaking the creation of a financial plan, it is common for new clients to escape the consequences of inadequately utilizing their executive compensation or avoid poor income tax outcomes. Recent examples include an executive projected to pay hundreds of thousands in unnecessary taxes. Another example was an executive who unknowingly was losing thousands of dollars in company benefits each year. When MRK Wealth Advisors discovered these problems, they immediately recommended company specific changes to benefit elections which rectified these issues.
New clients also benefit from a detailed review of prior tax return filings. According to Marybeth Hufnagel, CPA, Director of Tax Planning and Preparation for the MRK Wealth Advisors team, “Accountants unfamiliar with reporting pharmaceutical executives’ compensation sometimes mistakenly double-report long-term incentives on tax returns.”
To avoid such costly errors, each client has a CPA as part of their service team and MRK Wealth Advisors prepares income tax returns for many clients. The MRK Wealth Advisors tax team has seen numerous examples where the client’s state of residency attempts to tax benefits that are nontaxable. In one recent example, the state incorrectly assessed a client for nearly $40,000 in taxes, a tax bill the MRK Wealth Advisors team was able to have fully withdrawn after contacting state tax authorities on behalf of their client.
A client’s estate plan is another area that benefits from integration of an executive’s employer plan rules and beneficiary designations. For this reason, the MRK Wealth Advisors team employs a paralegal who serves as a liaison between a client’s attorney and their financial plan. According to Marie Krout, a paralegal on the MRK Wealth Advisors team, “clients benefit when the plan crafted by the client and their attorney is reviewed on an annual basis.”
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The cost of not navigating compensation and benefit structures or integrating tax planning is significant for life sciences executives
An important aspect of MRK Wealth Advisors’ financial planning success results from its team-based approach. While many advisors are a ‘jack-of-all-trades’, MRK Wealth Advisors stands apart by serving clients with an experienced and credentialed wealth management team led by a financial planner and supported by a team of specialists.
Externally, the MRK Wealth Advisors team collaborates with Summit Financials’ professional strategies team comprised of tax and estate attorneys , investment professionals including Chartered Financial Analysts (CFA) and insurance professionals including Chartered Life Underwriters (CLU), as well as any other trusted advisors a client might already employ including accountants and attorneys.
MRK Wealth Advisors also refers to a wider network of external professionals including estate planning attorneys, property and casualty insurance experts and other wealth management specialists. This ability to bring in outside experts ensures that clients receive unconstrained advice.
The Journey toward Greater Value
While MRK Wealth Advisors continues to serve a limited number of new clients each year, “Our existing clients are always prioritized over new client growth so that our existing clients continue to have the highest level of care,” says Halvorsen, clarifying the firm’s priorities. “We won't grow to a point where service to our existing clients is diminished.”
A deep investment in clients’ well-being reflects an underlying ethos. MRK Wealth Advisors considers serving professionals in the field of life sciences a great privilege. Serving clients allows them to be unburdened by wealth management complexities freeing time for these executives to spend with their families and allowing for greater focus on work which positively impacts society and add value to countless lives, a responsibility that the team finds immensely rewarding.
For professionals dedicated to preserving and enhancing public health, MRK Wealth Advisors becomes the ultimate support system for maximizing their executive compensation and protecting their financial health.
