Gaps in Income and Retirement Savings Keep Energy Executives Up at Night, Finds Study by Efficient Wealth Management, LLC

Financial advisor says volatile energy industry makes retirement planning a challenge

Houston, TX  (All News Wire)  Despite continued growth and a positive sector outlook, Houston’s senior energy executives admit that they are worried about gaps in employment and the ability to save for retirement, according to a newly released study done by Efficient Wealth Management, LLC, an independent registered investment advisor based in The Woodlands. The results of the study appear in A Platform for Retirement, a new report by the firm on the retirement challenges specific to energy executives.

“Almost universally, energy industry executives told us they are woefully unprepared for retirement despite high salaries and large bonuses,” says Paul Carroll, CFP, president of Efficient Wealth Management and author of the report. “Since the energy sector is so volatile, individuals face added pressure to maintain an adequate income stream during their working years, which often means retirement planning gets pushed to the backburner.”

Experts predict that the U.S. will be a net exporter of energy by 2017. In fact, the oil and natural gas sector accounted for one out of every five new jobs created in the U.S. between 2003 and 2011. Texas is already benefitting from a ramp up in industry growth. In 2011, the state had a low unemployment rate of three percent along with seven percent income growth, primarily because of the energy industry. With mid-career earnings averaging $94,000 per year according to a recent Forbes survey, Houston workers should be well-positioned to retire, but Carroll’s report finds this is not the case.

Additional findings include:

  • The top retirement planning priorities of energy executives are preserving wealth, taking care of heirs and wealth protection.
  • Fifty-five percent of energy professionals want more education about retirement planning, including investing and saving for the future.
  • 20 percent say their top challenge is maintaining job security and managing a ‘feast or famine’ income stream.
  • 10 percent are challenged by tax issues, including juggling different overseas tax brackets, the Alternative Minimum Tax (AMT) and capital gains taxes.

Respondents were also asked about the perceived opportunities and challenges for wealth in the sector. They identified the top wealth creation opportunities as being:

  • Improvements in technology will boost productivity.
  • Energy consumption will continue to rise as the world gets richer.
  • Population growth will increase demand for energy resources.
  • Oil shale, oil sands and coal bed methane are new energy sources with potential.
  • Increased employment opportunities are resulting from demand for shale oil/gas reserves.
  • U.S. dependence on oil imports should decrease as we find new uses for new energy products.

The biggest threats to the personal wealth of energy professionals are:

  • Rampant employee poaching, which drives up salaries in the short-term, but results in losing accrued pensions.
  • Economic and fiscal challenges undermining the industry’s active bonus structure.
  • The end of traditional, defined benefit pension plans coupled with a transition to less generous methods, including employee-funded defined contribution plans.

“When it comes to financial planning, energy executives are typically hamstrung by at least one of the following – insufficient savings early on, uncertain market conditions, lack of time or lack of resources,” says Carroll. “Our experience is that they tend to react to their industry’s highs and lows by reverting to traditional, low-interest bearing investments, which can put nest eggs in jeopardy. We believe there are alternative strategies that do a better job of helping to ensure a steady income stream and secure retirement.”

Efficient Wealth Management collected data for this study throughout 2012 by conducting a series of in-depth, in-person interviews with Texas-based professionals working in oil and gas exploration and production. Study participants were asked questions about their retirement readiness and their perceived barriers to personal financial success.

To obtain a copy of Efficient Wealth Management’s white paper, A Platform for Retirement, visit www.efficientwealthmanagement.com and click on “Contact us,” or call 281-528-1200.

About Efficient Wealth Management, LLC

Efficient Wealth Management, LLC, is a fee-based, independent wealth management boutique in The Woodlands, Texas, offering personal, concierge-level wealth management services to high net worth individuals and their families. The firm was founded in 2005 by Paul J. Carroll, CFP, and today caters to senior executives in Houston’s energy industry. The firm uses a consultative process to lead a team of experts in advising clients on building, preserving and protecting wealth. Efficient Wealth Management’s team is intimately familiar with pension plan issues, and routinely counsels individuals and families facing an uncertain energy industry and retirement. For more information, visit www.efficientwealthmanagement.com.


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