An advisor who views career as an asset class develops a life-planning model to manage it.
Every advisor has clients with job issues-some might
hate their career, others might face a life transition where a new job
could be part of the solution. But for the most part, there isn't a
structured method to deal with these situations.
Michael Haubrich believes that advisors doing comprehensive financial planning need an arrow in their quiver devoted to managing their client's career as a financial asset. Haubrich, a CFP and founder of Financial Service Group in Racine, Wis., has constructed a model that treats careers as an asset class and tries to quantify an approach to deal with it as part of the life-planning process.
"Within the financial planning domain, careers are dealt with as a constant rather than a dynamic variable," says Haubrich. "Career transition, if it's necessary, is another form of life transition and it involves the same dynamics."
A big part of Haubrich's focus is helping clients find the proper work/life fit that marries career with personal needs and values. A happy worker is a more productive worker, and that can help clients unlock their full income potential.
In tandem with that is the need to rethink the old-school retirement model where people quit their jobs by their mid-sixties and spend the rest of their lives playing golf or gin rummy. People are living longer, and that can deplete the nest egg. Folks who are happy with their work might be inclined to work beyond retirement age, perhaps in gradual downshifting mode, to bolster their income while maintaining a sense of purpose and fulfillment during their golden years.
Haubrich sees his career asset management model, or CAMM, as a tool to help advisors provide a value-added service that deepens client relationships. He also believes it's a potentially profitable niche that stands out from commodity-type services such as investment management, estate planning or income tax planning.
The model involves both quantitative and qualitative components. The former consists of the various forms of wages and benefits, as well employment costs such as employment taxes, transportation and child care that decrease wages. These numbers are crunched to come up with the career financial value.
The qualitative side looks at subjective concepts such as career knowledge, which can quickly decline in certain careers because technology changes so rapidly. It also gauges workplace interpersonal relationships, job satisfaction and self-actualization. Combined, these various measures comprise a person's total career value. That's used to make relative comparisons to similar jobs and to provide a means to gauge if one's job meets their career, personal and family goals.
In his CAMM white paper, Haubrich cites an example involving a 52-year-old chemical engineer and his 44-year-old wife, a public school educator. They have two teenage sons. The engineer didn't like his job and thought that retirement was the solution. It became clear during the discovery process that the couple wasn't ready to retire, even though they had enough resources to do so within about five years. In the man's case, both office politics and project creep made his job less productive and enjoyable, which in turn got in the way of his personal and family goals. What he simply wanted was to work on projects that utilized his talents and experience to help his company.
Haubrich analyzed the engineer's current finances, and projected possible outcomes if he kept working five years beyond his original retirement timetable (hopefully, at a more fulfilling level). Calculating the man's current income and benefits minus employment costs, and then applying a 6% discount rate for future cash flow over this period, Haubrich estimated that the client could boost his financial value by another $268,000.
In addition, Haubrich cited case studies in "Solving the Retirement Puzzle" by J. Peter Lindquist showing that some retirees aren't cut out for the more negative outcomes of retirement. In this client's case, the man realized that the potential downside of retirement outweighed his current career dissatisfaction. Haubrich saw the man as a perfect fit for the Work + Life Fit Roadmap, a concept developed by Cali Williams Yost, a work/life consultant and author. Using this, the client was emboldened to negotiate a better work situation that allowed him to focus on his core duties. This engendered greater job satisfaction and improved his overall work/life fit, and now the client envisions working another ten years.
Haubrich says the career asset management process naturally lends itself to the financial planning process of identifying goals, developing and implementing plans and following up with reviews. His big "Aha!" moment came a few years ago when some of his early-fiftysomething clients "just wanted to retire in five years and get the hell out," he says. "What I found out was that it was really about job dissatisfaction. They were holding on to the old retirement model as a tactic to deal with dysfunctional careers that weren't fitting their life goals."
The advisor's role is to listen carefully to detect clues that might signal career-related problems. Depending on a client's age, the red flags are their stated desire for early retirement or comments to the effect that they'll start living life after they quit work. From there, a few probing questions might be needed. "If you ask them what they'd do differently with their life if money wasn't an issue, and if they say the first thing they'd do is quit their job, that indicates they're not happy with what they're doing," says Haubrich.
If that's the case, Haubrich suggests bringing a career coach or counselor into the mix. Among other things, their services can include various tests that gauge an individual's personality, emotional intelligence, strengths and the best-suited work environment. The goal is to identify a client's skill sets and the ideal work environment needed for optimum performance.
That knowledge, when combined with career coaching or counseling, aims to point the client toward a better work/life fit. That could mean negotiating changes within a current job, or transitioning into an entirely new career. Costs for the service range from $3,500 to $5,000, depending on how comprehensive it gets. This includes roughly $1,500 or more on the career-development professional's side.
Haubrich's model is still in the beta-testing stage. In his own practice, he'll discuss it with his clients as a checklist item to see if it's an issue, and he looks at their career on an ongoing basis. To date, more than a dozen of his 140 retainer clients have availed themselves of the CAMM process.
Beyond that, Haubrich has teamed up two other financial advisors with career counselors to do case studies on his model, and he says a couple of other advisors have expressed interest in participating. He hopes to have six teams of advisors and counselors in place by year end.
Haubrich has interviewed numerous career coaches and counselors around the country, and he found that they also deal with people who view retirement as an escape from a dysfunctional career. But these career-development professionals said that financial fears make it hard for them to get people to make significant career changes. "Career coaches told me they weren't trained to deal with the financial part of job changes," says Haubrich. "That's when the light bulb went off that this is an opportunity for collaboration, because advisors doing life planning deal with life transitions all the time."
But what are you getting when you hire a career coach or counselor? Kevin Grant, who runs the executive benefits practice at Higginbotham & Associates in Dallas, heard Haubrich speak at the Dallas-Fort Worth FPA chapter in January and believes that the career asset management model can be a tool to help corporations retain high-end executives. Yet he cautions that you don't know what you're getting when you bring career coaches on board. "These coach-type people aren't easy to evaluate because they don't have the practice standards we do," says Grant. "Who's for real in that space?"
It's a concern that Haubrich understands. The career-development industry has standards and regulations, he says, but they're not as developed as the financial planning industry. When Haubrich interviews these professionals, he looks specifically at the assessment tools and types of engagement they use with clients. As of early April, he hoped to soon finish writing an article on how advisors can find career coaches with whom to collaborate.
Haubrich thinks his career asset management approach is plugged into the latest employment and societal trends. The U.S. Labor Department estimates that people entering the job market today will change jobs nine times during their career. Simultaneously, slower population growth and a service-oriented economy mean there will be more employment opportunities for older folks in coming years. And, increasingly, technology gives some people the ability to have more flexible work schedules better tailored to their personal needs. In short, it's a fluid workplace.
"It's a challenging thing to model with financial planning software because it's basically built with the premise that people would work the same kind of job, get inflation-based raises, and then retire and be done," says Sherill St. Germain, principal at New Means Financial Planning in Hollis, N.H., who's familiar with Haubrich's work. "This model might facilitate a downshifting transition to retirement because some people find it's a scary jump to go from full time to zero."
Haubrich has big plans for his model as he takes his message to the industry. "This is new stuff," he says. "I'm not saying it's a turnkey system yet. But I'd like to open the floodgates for innovative advisors to apply their smarts and take it to a level beyond what I'm doing now."