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Extending the Definition

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When viewing your clients’ plans, do you include helping them manage their careers? Michael Haubrich thinks you should. When developing a comprehensive financial plan for clients, he argues that planners should expand their definition of asset classes to include a client’s career as a “new and vital element in the data gathering, analysis, and development phases of traditional financial planning.”

Haubrich, a CFP with Financial Service Group in Racine, Wisconsin, has dubbed his novel approach Career Asset Management (CAM), and says that like traditional asset classes of stocks, bonds, cash, and real estate, the career asset class provides planners with an opportunity to add value by increasing clients’ potential income and building with them a better balance between their work and the quality of their lives.

When talking to clients about retirement, Haubrich noticed that many voiced a desire to retire early and quit their careers completely. After probing, he says, most clients admitted they wanted to retire early so they could get out of failing careers. So by focusing on a client’s career and improving his satisfaction with it, “then we’re in a position to get them off of that paradigm of taking retirement early–to extend [retirement] by another five years,” he says.

Haubrich offers this example: A client with peak annual income of $150,000 abruptly retires at age 60 instead of extending the career asset for an additional eight years–first three years at 75% work time (and income), the next three years at 60%, and last two at 40%. Assuming an average income and employment tax rate of 40% and a 6% discount rate, the net present value of that increased income stream is $348,150. He notes that the example only accounts for income, and doesn’t include “other quantifiable measures of the value of the career asset” including employee benefits, increased value of a pension plan, and Social Security benefit accruals.

Many clients make the mistake of just wanting to get out of their careers, Haubrich says, so if planners can “catch them earlier and treat [the problem] more holistically, we’re in a position to add tremendous value–before they go to the extreme of just getting out.”

Finding Common Cause with Career Coaches

To help in this endeavor, Haubrich collaborates with career coaches and counselors in much the way planners deal with estate planning attorneys and accountants. He says career development professionals are itching to partner with financial planners because they see fear of finances as “the main roadblock to their clients really taking aggressive steps in optimizing their career,” and that “financial planners can work with their clients to make sure their money is in line with the transitions that they need to make with their careers.”

Plus, he says, planners can get a steady stream of referrals from career counselors and coaches just as they would from estate planning attorneys or other professionals. “If planners would just include career asset management in their dialogue [with clients], they’ll discover that this is not only a great value add, but a tremendous business development opportunity.”

In the last year alone, Haubrich says he has added about 12 new clients from referrals he’s received from career coaches. Haubrich charges an extra $1,000 to $1,500 for a comprehensive financial plan that includes career asset management. If a client wants a standalone career makeover, he charges about $3,000, he says, because it includes going through the same planning steps. A career makeover “doesn’t include risk management and estate planning, but you certainly are involved with asset management and asset allocation because if a person is doing a career transition, they need to reposition their assets to support that transition.”

Helping Older Clients, Attracting Younger Ones

Haubrich recalls a referral he got from a career coach. Janet was in her mid-50s and worked as a middle manager in IT for a Fortune 500 company. “She came in and insisted on the old retirement model [of retiring early] and wanted us to figure out whether she could afford to get out of there in the next 18 months, saying she’d figure out then what she wanted to do,” Haubrich recalls. “We crafted a plan, and six months later she called and her personal life was in turmoil–they’d cut a couple more of her reports and she was stressed,” he says. “I met with her and told her the return on life just wasn’t there, and we’re going to figure out a way to rearrange your finances and you’re going to get out now.”

Approximately 12 to 15 of Haubrich’s 150 clients–mainly retirees–are getting career guidance. Since the bulk of Haubrich’s clients are in their late 60s, he’s using the CAM model to draw in younger clients. “For clients in their 30s, we work with them to adopt a habit of lifelong learning; to be positioned for project-based employment where they are constantly in a position to move to areas where their skills are more in demand,” he says. A Bureau of Labor Statistics study found that people change jobs nine times in their lifetime, he points out. “To the extent that the financial planning process facilitates those transitions as quickly as possible, I think that’s a tremendous value add.”

He also cites a study by Harris Interactive and Merrill Lynch that found that 71% of adults say the ideal retirement would be to work in some capacity. The study also found that two-thirds of adults who expect to do some kind of work would prefer to try a new line of work. “As financial planners, we are change agents to assist in human capital to move our clients from one job to another more quickly–even at a younger age.”

Paula Hogan, a planner with Hogan Financial Management in Milwaukee, has embraced the CAM model and believes that Haubrich has identified a “really good planning issue for the profession.” In the same way that planners collaborate with estate attorneys and CPAs, Haubrich is rightly “suggesting that there should be another person at the table,” the career coach, she says. This allows planners to “get to the heart of what clients worry about at night.” Hogan says that while “good advisors” have been doing career management for a long time, Haubrich has shined a light on the practice and is helping planners to recognize that it should be part of their standard checklist.

Although Hogan is using the CAM model with her existing clients, she’s also helping a client through a pro bono program that Haubrich launched with the help of the local business newspaper. People who are willing to share their story with the paper can work with Haubrich and other local planners and career counselors for free. Hogan is now helping Rusty, a 52-year-old pilot who was laid off from his dream job due to a heart ailment, cope with the financial strains of losing his job while a career counselor is helping him find career alternatives. In working with the counselor, “Rusty has a sense of optimism and energy that comes from working with [the counselor] and a sense of hope that he can move on,” Hogan says. “The work he does with me and the work he does with the career counselor dovetails in a very exciting way.”

CFP Board Balks at CE for CAM

Haubrich is indeed having success in getting other planners to embrace the CAM model, but he’s gotten “tremendous resistance” from the CFP Board in his attempts to get career asset management to be included in continuing education credits, he says. “The CFP Board argues there isn’t enough financial planning in the process,” Haubrich says. “But it is financial planning!” he argues passionately. Haubrich says he’s told the CFP Board that “he’s not going away,” and that he’ll continue to fight to see that career asset management gets a CE mark.

He argues in a paper that he wrote on the CAM model that “adding Career Asset Management to the financial planning process is a natural fit as long as the planner is following the six steps of the financial planning process (establishing client-planner relationship, discovery, analysis of current state, developing the plan, implementation, and ongoing monitor and review). The Career Asset Management Model runs parallel to the financial planning process.”

Planner Hogan agrees that clients’ careers are their major asset. “How could you not talk about their career?”

Change agents and strategic thinkers like Haubrich are what every profession needs. In his CAM model explanatory paper, he also cites a number of trends that make it even more imperative for advisors to take career asset management seriously. Technology and a 24/7 global economy, he argues, is changing how and when work is done. “Employee attraction/retention are going to be critical management imperatives, with the U.S. Labor Department’s ‘quit rate’ [the rate at which people quit their jobs] reaching a four-year high, growing concern in the human resource profession about the increasing number of voluntary resignations, and 76 million Baby Boomers approaching retirement.” That’s certainly food for thought.

Washington Bureau Chief Melanie Waddell can be reached at [email protected].


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