How a Financial Advisor Can Guide You Through a Job or Career Change

Running the Numbers When Deciding Whether to Change Jobs

When you are considering switching jobs, a financial advisor can help you evaluate how leaving your current position may impact you financially, such as by assessing any deferred compensation or time-based bonuses that may be affected if you decide to leave early. They can offer guidance on whether now is the right time to look for new opportunities or if you would gain more by waiting longer to make the most of your current benefits. Additionally, they can advise on whether you have enough money saved to comfortably afford a career change and help you set up a cash flow plan for periods when your income will be interrupted or irregular. An advisor can also run financial projections for your future based on different income scenarios and compare the total compensation packages you are offered in new positions. This will allow you to better understand how a potential job change might affect your long-term financial plan and what you stand to gain or lose for each path you consider. 

Reassessing Your Financial Plan 

Career changes and other major transition points in life are opportune moments to evaluate and update your existing financial plan. Job changes often come with a change in income. In most cases, if you are advancing in your field, you will be earning more in your new position. However, if you are transitioning to an entirely new field or starting your own business, you might need to plan for a pay drop while you gain experience. 

In addition to the new job’s pay, there are other significant factors to consider. For example, if you are relocating to a high cost of living area for your new job, a salary increase may not go as far as you would initially expect. A financial advisor can work with you to realign your budget with your new income and expenses and can help you determine the best uses for your money, such as increasing your investments for retirement. They can also keep you accountable to avoid overspending and other financial behaviors that can be detrimental to your long-term financial well-being. 

Evaluating Your New Benefits Package

Alongside salary changes, your new position may offer a new retirement account, a 401(k) match, stock options, or other financial perks. A financial advisor can help you determine how best to take advantage of these benefits to further your progress toward achieving your financial goals. They can also review your current insurance coverage and the insurance policy options your new employer offers to ensure you have sufficient coverage to protect yourself and your loved ones from financial catastrophes while avoiding paying for unnecessary policies. 

Transferring Retirement Account Funds

If you contributed to an employer-sponsored retirement account such as a 401(k) at your previous job, you will need to decide what to do with those funds. Your options include cashing the account out, leaving your funds inside the previous 401(k), or rolling over the funds to an IRA or your new employer’s 401(k). In the vast majority of cases, rolling over the funds is the wisest move, and a financial advisor can guide you through this process to ensure the rollover goes smoothly. They can also guide you through making investment decisions in your new employer’s retirement plan, such as by helping you compare the investment options, fees, and tax implications. If you are starting your own business, a financial advisor can help you set up a retirement account for yourself, such as a solo 401(k) or a SEP IRA.