The big financial asset you don’t know: your career

0

When you prepare for retirement, you undoubtedly think about how much money you have and how much you will need. But I bet you don’t give much thought to the place of your career among your financial assets.

Michael Haubrich, the certified fee-paying financial planner who runs the financial services group in Racine, Wisconsin, says that’s a big mistake.

The author of Career Asset Management: Get ahead, stay ahead and use your head to maximize the value of your career, Haubrich thinks your career can – and should — be considered an asset in the same way as stocks, bonds and other investments. And, he says, you need to manage your career asset to maximize its long-term return. Once you do, he says, you might be able to ease your fears of having enough money in retirement.

Haubrich’s new financial planning practice brings clients together with career professionals in a sort of triage to avoid financial or professional disaster. The service doesn’t come cheap: Its “relationship fee” starts at $5,400 and is determined by factors such as the client’s net worth and income. “We’re not for everyone,” Haubrich told me, “but we do pro bono work for some people who can’t afford to pay us. We can only onboard 15 new customers per year.

I recently interviewed Haubrich to ask for his approach and advice; highlights follow below. (You can read more about his career asset management idea on Haubrich’s site, Careerassetmanagement.com.)

Next Avenue: How did you come up with the idea that people should view their careers as a financial asset?

Michael Haubrich: I discovered the opportunity by working with retirement clients and seeing that they didn’t have grand plans; they saw retirement as a way to manage their dysfunctional careers.

Viewing your career as a financial asset requires keeping your career asset engaged longer, and that’s true even on a societal level. We cannot afford to let people retire to a life of complete leisure for twenty or thirty years; it just won’t work. We would relieve a lot of pressure on our financial assets if we kept our career engaged longer, even at a lower level of work.

Why is it useful to consider your career as a financial asset?

Many people think of their career in the context of immediate income. But you have to take the goal out and think of it as a lifetime career asset – not just a paycheck in the present, but its future paycheck and how to optimize it so that the way you work is durable and that you do not run out.

A lot of people who come to me in their 50s and 60s have worked awful hours in abusive environments and they think “I’ll stop doing this when I stop”. I will start living when I stop. It’s a bad way to think.

You like to use a real estate metaphor and say that some people see their careers as “triple net leases” and instead have to think of themselves as the owners of their career. What do you mean?

In the days of lifetime employment, your career was like a triple net lease. In a triple net lease, the landlord has a long-term contract with a tenant and the tenant behaves as if he owns the property, assuming responsibility for paying taxes, making improvements, arranging maintain and optimize the property.

With a triple net lease, there was a mutual understanding that the employee would remain loyal to the employer and the employer would be responsible for developing and managing your career, giving you everything you needed to be relevant. on the market.

In the new economy, this implicit contract is broken irreconcilably. Today, you must view your career as a short-term lease and be prepared to change the way you position yourself in the market. You need to think about your transferable skills, figure out where the market is moving for the demands of your skills, and make sure if there are any gaps in your future demand that you fill them to find the best tenant for your property – yourself. same .

Is it too late to do this if you are in your 50s or 60s?

No. But there’s deferred maintenance everywhere that keeps people from being relevant to the market.

It also depends on your domain. If you make $150,000 but in your field you could be replaced by a 25-year-old for a third of the price, that’s the reality. Then what we need to do is recognize, ideally while you still have that $150,000 job, how to prepare for a soft landing and not a hard landing.

It is important that you always compare yourself to the ever-changing market. If you don’t, you may end up donning a victim’s mantle.

How do we proceed for the comparative analysis?

You can start with online services like Salary.com, to see how much people get paid for jobs like yours. But I think benchmarking goes hand in hand with lifelong learning. If your field has an association, go to its conferences and do an informal survey. Most associations also have salary surveys.

How does a person improve their value proposition in the market?

I have a client who works at a power plant in Wisconsin. His unique skill is his expertise as a vibration expert; it is the benchmark in a career that has lasted for thirty years. He earns around $75,000 to $80,000 and he’s heard rumors of layoffs and restructuring. I asked him if there was any certification for vibration and he said “Yeah, in the last ten years they’ve put it out, but I’ve blown it”. Now he’s going to get that certification. As far as he knows, he’s not at risk of losing his job, but he’s making the situation his own.

How do careers still fit into the idea of ​​career asset management?

The people most affected by this question of career optimization are those who feel anxiety – knowing in their gut that they don’t have a good plan for retirement. Their level of motivation is highest in the pre-still stage of contemplating a still stage of life. To them, I feel like I’m in an emergency room doing triage.

You sometimes ask your clients to do what you call “worst-case scenario visualization”. How does it work and why is it useful?

It allows us to take our fears and explore them, assuming they are real.

I sometimes hear: “You don’t know how my boss is. It’s toxic as hell. When we probe deeper, I ask, “What would you need to make this work?” And if the person says, ‘It doesn’t matter, if I tell my boss, he’s going to fire me’, I say, ‘Suppose that happens and you’re unemployed, what’s the point? would it look like?

The amazing thing about this is that it takes away from that whole process of thinking about how bad it would be if you lost your job. Most of the time, people have financial resources. It empowers you to assume the worst outcome and show how you can respond with resilience.

When working with your financial planning clients on career asset management, do you use career counselors? How it works?

It is a collaborative approach with career coaches or other career development professionals. Sometimes we even work with counsellors, depending on how angry the person is about the psychological and emotional impacts of what is happening.

With a coach, there is a series of assessments to compare where the client is in relation to their ideal job and fair compensation. The coach may come back and say we can renegotiate with the existing employer for a positive outcome; it is the simplest. But often this requires a change of job. I rely on the coach to tell me how long the person may be unemployed or need retraining during a career sabbatical. Then I align the person’s finances to support a career transition.

I want to minimize financial stress when clients don’t collect paychecks. If possible, I put money aside each month in working capital.

What is it and how does it work?

A revolving fund is distinct and separate from an emergency fund; If you are on a two-year retraining sabbatical and need a monthly income of a $3,000 after-tax paycheck and have the resources, we could set aside $70,000 as a reserve. and each month transfer $3,000 to your checking account. So it’s framed like receiving a paycheck.

Share.

Comments are closed.