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."