To Your Wealth
Racine Journal Times
Michael P Haubrich, CFP
Career Asset Management
I’ve written in past columns about the need to
consider your career among your most valuable
assets along with your home, retirement account,
and other traditional assets. As such, your
career needs to be managed as an asset. It needs
to be viewed with the objective of increasing
value, and if it’s not providing value, we
adjust the portfolio—maybe even dump the
non-performer (a bad job).
The 24/7 global economy is changing our work
place. Skills become obsolete faster. Workloads
and stress are at levels never before seen.
Unprecedented demands are also changing our
lives outside of work. As a result, we’re
finding clients meeting with us about
retirement, seeing it as an escape hatch to a
career not fitting their work/life objectives.
Many times they believe the only solution is the
all or nothing work or retire scenario. By
viewing career as an asset, we can consider a
range of alternatives on the continuum between
not working at all and full-time work until
retirement. This provides the opportunity to
optimize the career asset – extend its value --
and extend its life.
Consider a client with peak wages of $75,000 who
abruptly retires at age 60. What if instead, we
extend the career asset for an additional eight
years – the first three years he works at 75
percent of his current schedule and income, the
next three years at 60 percent, and the last two
at 40 percent. Assuming an average income
and employment tax rate of 40 percent and a six
percent discount rate, the value in today’s
dollar of that increased income is $174,150.
Now, that’s a good return on your investment.
We’re oversimplifying here given that income is
the only consideration taken into account. Other
quantifiable measures of a career asset’s values
include employee benefits, increased pension,
and Social Security benefit accruals. Plus,
there are qualitative (non-financial) factors,
such as job satisfaction and social interaction.
Career optimization is the process of
increasing career asset value. Comparing a
career to a rental property helps explain this.
If deferred maintenance (career skill set) along
with a destructive tenant (employer or negative
work/life fit) are allowed to continue, over
time the property’s (career) value will decline,
the ability to increase rents (maximize skills)
will be reduced and the useful life diminished.
The value of this mismanaged asset (career) is
minimized. But, by evicting the destructive
tenant (adjusting the negative work/life fit
factors) and rehabbing the property
(learning/applying new skills or changing jobs),
we can increase future cash flow potential along
with the useful life.
Career counselors report that financial fear is
the most significant roadblock for employees
making changes to improve work/life fit and
career optimization. That’s why we developed
Career Asset ManagementTM , a new
service designed for financial planners to use
in partnership with career counselors to manage
the financial aspects of career.
By studying this issue for the past two years in
collaboration with our clients, we learned that
by reframing career as a financial asset and
working together with career counselors, we can
objectively advise and facilitate discussion and
change for our clients. By looking at the data
along side clients, we can help them get past
financial fears and deliver measurable results
through increasing potential income, optimizing
work/life fit and extending the life cycle of
their career asset.
For the most up to date commentary on work life
issues, you’ll find a new blog by Cali Williams
Yost, author of Work+Life, Finding the Fit
that’s Right for You, as a good resource.
The blog, believed to be the first dedicated
solely to work life issues, is at
www.worklifefit.com
Mike Haubrich is president of Financial Service
Group, a registered investment advisory firm in
Racine. On the Web:
http://www.toyourwealth.com
