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Financial Planning for Energy Industry Professionals

By  Brian Thorp

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Energy is a vital and rapidly evolving industry that affects almost everyone. Whether focused on traditional fossil fuels like oil and gas or renewable energy sources like solar and wind, energy industry professionals play an integral role at companies ranging from multinational household names to innovative startups.

Since the global economy and our society depend heavily on a reliable supply of energy from multiple sources, an outside observer might be inclined to believe a career in the energy industry offers stability in any economic environment. But seasoned energy professionals would be the first to tell an industry newcomer to expect their fair share of ups and downs over the course of their career.

For many energy industry professionals, the demands of your position combined with family and life commitments outside the office can lead to financial planning for your future slipping through the cracks. But by setting aside time to prioritize your finances, you can ensure you and your family reap the benefits of your hard work for years to come. 

Challenges of Financial Planning for Energy Industry Professionals

There’s no denying the energy sector is incredibly volatile. This can make it a real challenge when it comes to planning your finances. After all, just because you have a stable job today, doesn’t mean you’ll continue to have one years or even months from now. 

Fortunately, there are an increasing number of financial advisors who specialize in working with energy professionals who have experience assessing and preparing for the unique financial planning challenges you’re likely to face over the course of your career. 

By reading this guide and working with an experienced financial advisor, you’ll make major strides towards maintaining financial security and achieving your long-term goals no matter the economic environment. 

Financial Planning for Energy Industry Professionals

There are a number of topics to consider as well as questions you’ll have when you’re planning your finances as an energy industry professional. Here’s a brief overview:

Living Well on an Energy Industry Professional Income 

The energy industry creates and supports countless American jobs. According to the 2019 U.S. Energy and Employment Report, it actually leads all sectors in high-quality positions. So if you work in oil or gas or at a firm focused on renewable energy sources, there’s a good chance you earn a great salary that allows you to lead a comfortable life. 

While you may be tempted to splurge when you’re feeling secure in your role, be sure to do so in moderation. This way you’ll have enough money set aside to help you navigate a downturn, especially in the event you get furloughed or laid off. 

Here are a few questions a financial advisor can help you answer so you can make the most of your income as an energy industry professional.

  • How much should I save each month to ensure I build a healthy financial safety net?
  • Can I afford my current lifestyle on my income or should I make adjustments?
  • What financial planning insights have you gained working with other energy industry professionals like me?

Repaying Your Student Loans as an Energy Industry Professional

There’s no rule that says you need a college degree for every position in the energy sector. However, many energy industry professionals hold a bachelor’s or graduate degree which means you may have sizable student loans to pay off. 

Regardless of how much you may owe, it’s a good idea to design a realistic repayment plan. Depending on where you work, your company may offer student loan assistance to help you repay your student loan debt. 

A financial advisor can help you determine whether you should repay your student loans quickly or prioritize other financial goals instead. 

Making the Most of Your Employee Benefits in the Energy Industry

Most oil and gas companies offer generous benefit packages to their employees while many newer companies in the industry lacking considerable financial resources might offer greater upside from stock options instead. 

This means depending upon where you work, you may be eligible for a variety of benefits such as insurance, an employer-sponsored retirement plan, flexible hours, vacation and paid time off, sick days, and professional development opportunities. Depending on your company and position, you may also qualify for stock options.

When you meet with a financial advisor, you’ll discuss how to make the most of your employee benefits. Examples of questions a financial advisor will help you answer include:

  • How much of my income should I invest in each of the retirement and savings plans available through my employer to maximize my benefits?
  • How should I diversify the investments in my retirement and savings plans to avoid over-exposure to a downturn in the energy industry?
  • How can I use professional development and training opportunities to increase my income and improve my financial well-being?

Buying a House as an Energy Industry Professional

Since a house will likely be one of the largest investments you’ll ever make, it’s important to be thoughtful while going through the home buying process. Fortunately, you shouldn’t have any issues proving your income via W2s and pay stubs to get approved for a mortgage. 

The roadblock you may face, however, is showing that you have a history of a stable job with consistent pay. This is particularly true if you’ve been laid off in the recent past or gone long periods of time without employment. 

A financial advisor can help you overcome these headwinds and find the ideal mortgage loan and lender for your situation. They may also guide you on a realistic budget for a home so that you’re not stuck in a position where you can’t make your payments or feel “house poor.” 

Saving for Retirement as a Energy Industry Professional

As an energy professional, you likely have an opportunity to save for retirement through a 401k. You can choose how much or how little to deduct from each paycheck and contribute toward retirement. Your employer may match your contribution and essentially provide you with “free money” for retirement. 

If you don’t receive a 401k, you should consider saving for retirement via a Roth IRA or Traditional IRA. The amount you’ll need to save will be based on when you’d like to retire and how you hope to live during your retirement years. 

Keep in mind that investments in your retirement plan and/or stock options in your company could result in your net worth being over-allocated to a very volatile industry. Since this can be a significant risk, your financial advisor can recommend a plan to diversify your investments. 

When you partner with a  financial advisor, you’ll work together to design a strategy to help you retire when and how you’d like to. You’ll discuss questions such as: 

  • How much do I need to save to meet my preferred retirement lifestyle?
  • Where should I keep my retirement savings?
  • What is my long-term investment strategy?
  • What’s the best way for me to diversify? 

Rob Lloyd, CFA

Lloyds Intrepid Wealth Management

Q: As an energy industry professional, how should I manage my concentrated stock position?

Rob: “It is quite common for energy executives to acquire large amounts of company stock over the course of their careers. A concentrated stock position exists when a single company exposure makes up 15% or more of a family’s portfolio. Whether they are awarded as compensation or added to your 401k plan, one must consider several key factors to ensure you wisely manage this type of position. Most advisers recommend reducing these type of investments because they are difficult to forecast over long periods of time.

For energy executives, the key factors for managing a concentrated position are commodity cycle knowledge, taxes, covered calls and regular rebalancing. Understanding the commodity cycle is a key factor because these types of cycles can last years and may require patience to get to a good exit point for a concentrated position. Finding an adviser with good insight into energy sector fundamentals will be very helpful.

Tax considerations for concentrated stock positions are also important. The executive will want to consider how the investment will be taxed: ordinary taxable income, net-unrealized-appreciation, or tax-deferred are different tax treatments we typically see with the concentrated positions of energy employees. A thorough analysis designed to minimize the tax obligation is required to maximize the after-tax return on investment.

Covered calls and regular rebalancing are two techniques for trimming large positions over time. Covered calls are options contracts that can be written over an existing long stock position. The option writer collects an option premium on the existing stock knowing that if the stock rises significantly, the stock will be “called” away and sold. Regular rebalancing is another strategy for periodically reducing a concentrated position using time or position size as a trigger for selling small portions of the concentrated holding.”

Expenses and Deductions: Keep More of Your Income

If you work in the energy industry as a W2 employee, you’ll have two options at tax time: take the standard deduction or itemize your expenses. While the standard deduction might make the most sense in your situation, it’s important to discuss this with a financial advisor. 

Your financial advisor can help you determine if you’re eligible for any deductions and whether itemizing is even a viable option for you. A few examples of questions a financial advisor may help you answer include: 

  • Does it make sense to take the standard deduction or itemize?
  • Which deductions am I eligible for as an energy industry professional?

Your Insurance Needs as a Energy Industry Professional

Your company may provide you and your family with health, dental, and/or vision insurance. While this is a huge perk, you may be unsure of which plan to choose, especially if you’re unfamiliar with the differences between PPOs, high deductibles, and other health insurance plans out there.

Also, even though your company may offer life insurance, it’s unlikely it will be enough to protect your loved ones. You may need to purchase a supplemental policy to fully protect your family in the event you pass away. 

A financial advisor can help you understand your employer-sponsored insurance options and figure out if you need to invest in other policies. 

Financial Planning is a Necessity

It’s your personal responsibility to ensure your energy career benefits you and your family by coming up with a strong financial plan. 

A financial plan can help you feel secure about your finances even when you’re unsure of what tomorrow may bring. With the help of a financial advisor, you can get the answers to all of your pressing financial questions and design a game plan that leads to success. 

Nick Lyons CFP Goff Financial

Nick Lyons, CFP®

The Goff Financial Group

Q: As an energy industry professional, why should I hire a financial advisor with knowledge of my industry?

Nick: “Energy professionals often face unique challenges as rapidly changing commodities prices can magnify their exposure to company-specific risks.

A financial advisor familiar with these risks and other industry specific challenges can help provide strategies to potentially reduce their impact.

When nearing retirement, energy professionals face a myriad of choices. Whether it is deciding between taking a pension or lump-sum, choosing to utilize net unrealized appreciation (NUA), or simply determining if they can retire, you may only get once shot at getting it right.

Speaking with an advisor who is already knowledgeable with these benefit plans can help reduce the chances of making financial missteps.”

Enjoy a Secure Financial Future 

Financial security means you have enough money to lead the life you love while working toward your personal financial goals. Whether you’d like to buy a house, retire early, pay for college, travel, or remodel your kitchen, a financial plan designed by you and a financial advisor can help you reach your goals.

How To Find The Best Financial Advisors for Energy Industry Professionals

While you may find a great financial advisor to work with through the referral of an acquaintance or whose office you drive by on your daily commute, it’s important to consider several factors to improve your odds of hiring the best financial advisor for your individual needs.

As an energy industry professional, you may decide the best financial advisor for you is one who specializes in understanding the unique financial planning challenges and opportunities common among energy workers. These specialist financial advisors may hold credentials that demonstrate their expertise along with considerable experience working with clients in the energy industry that could benefit your own financial planning needs.

Because many financial advisors can work with you online, you’re not limited to hiring a financial advisor in your neighborhood when the best financial advisor for you may live hundreds of miles away.

In other words, whether you choose to hire a financial advisor who lives near or far, it may be most important to hire a financial advisor who truly understands your individual needs based on their education, experience and commitment to helping people just like you.

You’ll find a growing number of financial advisors on Wealthtender who serve energy industry professionals, including advisors specializing in working primarily with energy professionals and executives.

Rob Lloyd, CFA

Lloyds Intrepid Wealth Management

The Woodlands, Texas

Explainer of markets, plans and portfolios.

The Woodlands, Texas

Explainer of markets, plans and portfolios.

Areas of Focus

  • Employee Stock Options
  • Estate Planning
  • Investing
  • Investment Management
  • Living in Retirement

The Goff Financial Group

Houston, Texas

Fee-Only | Fully Independent | Fiduciary

Houston, Texas

Fee-Only | Fully Independent | Fiduciary

Areas of Focus

  • Family and Money
  • Inherited Wealth
  • Investing
  • Investment Management
  • Job Loss


Additional Resources:

The Best Finance Blogs and Podcasts for Energy Professionals

With over 250 personal finance blogs and financial podcasts featured on Wealthtender, you’ll find several that regularly publish articles and episodes with financial planning insights useful to energy industry professionals.

Do you have a favorite blog or podcast for energy industry professionals not featured on Wealthtender? Let us know in the comments section below or by email at yourfriends@wealthtender.com.

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About the Author
Brian Thorp, Founder and CEO of Wealthtender profile picture

About the Author

Brian Thorp

Brian is CEO and founder of Wealthtender. He and his wife live in Texas, enjoying the diversity of Houston and the vibrancy of Austin.

With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

Connect with Brian on LinkedIn

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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