As you prepare for retirement, you undoubtedly think about how much money you have and how much you’ll need. But I bet you don’t give a lot of thought to where your career fits in among your financial assets.
Michael Haubrich, the fee-only Certified Financial Planner who runs the Financial Service Group in Racine, Wis., says that’s a big mistake.
The author of Career Asset Management: Getting Ahead, Staying Ahead and Using Your Head to Maximize Your Career Value, Haubrich believes your career can — and should — be viewed as an asset on par with stocks, bonds and other investments. And, he says, you should manage your career asset to maximize its long-term return. Once you do, he says, you may then be able to lessen your fears about having enough money in retirement.
Many people think of their career in the context of immediate income. But you need to pull back the lens and look at it as a lifecycle career asset.
— Michael Haubrich, financial planner and author
Haubrich’s novel financial planning practice brings together his clients with career professionals in a kind of triage to avoid a financial or career disaster. The service isn’t cheap: his “relationship fee” starts at $5,400 and is determined by factors such as a 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 us. We can only onboard 15 new clients a year.”
I recently interviewed Haubrich to ask him about his approach and advice; highlights follow below. (You can learn more about his career asset management idea at Haubrich’s site, Careerassetmanagement.com.)
Next Avenue: How did you first come up with the idea that people should think of their career as a financial asset?
Michael Haubrich: I discovered the opportunity by working with clients about retirement and finding they didn’t have grandiose plans; they looked at retirement as a way to deal with their dysfunctional career.
Thinking of your career as a financial asset requires keeping your career asset engaged longer, and that’s true even at a societal level. We can’t afford to have people retire to a complete life of leisure for twenty or thirty years; it just won’t work. We would take a lot of pressure off our financial assets if we kept our career engaged longer, even at a lower level of work.
How is it helpful to think of your career as a financial asset?
Many people think of their career in the context of immediate income. But you need to pull back the lens and look at it as a lifecycle career asset — not just a paycheck in the present, but its future paycheck and how to optimize it so the way you work is sustainable and you don’t burn yourself out.
A lot of people coming to me in their fifties and sixties have been working ungodly hours in abusive environments and they think ‘I’ll stop doing it when I quit. I’ll start living when I quit.’ That’s a flawed way of thinking.
You like to use a real estate metaphor and say that some people see their careers as ‘triple net leases’ and that they need to think of themselves instead as landlords of their careers. What do you mean?
In the old days of lifelong 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 like they own the property, assuming responsibility for paying the taxes, making improvements, arranging the maintenance and optimizing the property.
With triple-net lease employment, 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 whatever you needed to be relevant to the marketplace.
In the new economy, that implied contract is irreconcilably broken. Today, you need to look at your career as a short-term lease and be ready to change the way you position yourself in the market. You have to think about your transferable skills, figure out where the market is moving for the demands for your skills and make sure if there are any gaps in your future demand that you are addressing them to find the highest value tenant for your property — yourself.
Is it too late to do that if you’re in your fifties or sixties?
No. But there is deferred maintenance all over that keeps people from being relevant to the marketplace.
It also depends on your field. If you earn $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 acknowledge, ideally while you still have that $150,000 job, how to prepare for a softer landing and not a crash landing.
It’s important that you’re always benchmarking yourself against the ever-changing marketplace. If you don’t, you can wind up taking on the cloak of a victim.
How does someone go about benchmarking?
You can start with online services like Salary.com, to see what people are getting paid for jobs like yours. But I think benchmarking goes hand-in-glove with lifelong learning. If your field has an association, go to its conferences and do an informal survey. Most associations have salary surveys, too.
How does someone improve their value proposition in the marketplace?
I have a client who works at a power plant in Wisconsin. His unique skillset is his expertise as a vibrations expert; he’s the go-to guy in a career that’s been going on for thirty years. He makes about $75,000 to $80,000 and he heard rumblings about layoffs and a restructuring. I asked him if there was certification for vibrations and he said ‘Yes, in the last ten years they came out with it, but I blew it off.’ Now he’s going to get that certification. He’s under no risk of losing his job as far as he knows, but he is taking ownership.
How do encore careers fit into the career asset management idea?
The people who are most relevant to this issue around optimizing careers are ones feeling anxiety — knowing in their gut that they do not have a good plan for retirement. Their level of motivation is greatest in the pre-encore stage of contemplating an encore stage of life. For them, I feel like I’m in an emergency room doing triage.
You sometimes ask clients to do what you call ‘worst case scenario visioning.’ How does that work and why is it helpful?
It allows us to take our fears and explore them, assuming they are real.
I sometimes hear: ‘You don’t know what my boss is like. It’s toxic as hell.’ When we drill into it, I ask: ‘What would you need to make this work?’ And if the person says, ‘It doesn’t matter, if I talk to my boss about this, he’ll fire me,’ I say ‘Assume that happens and now you’re unemployed, what would that look like?’
What’s amazing about that is it disempowers that whole thought process on how terrible it would be if you lost your job. Most of the time, people have some financial resources. It empowers you if you assume the worst outcome and show how you can respond through resilience.
When you work with your financial planning clients on career asset management do you bring in career advisers? How does that work?
It’s a collaborative approach with career coaches or other career development professionals. Sometimes we even work with counselors, depending on how beat up the person is about the psychological and emotional impacts of what’s going on.
With a coach, there’s a series of assessments to benchmark where the client is in relation to their ideal work and fair compensation. The coach may come back and say we can renegotiate with the existing employer for a successful outcome; that’s the simplest. But often, it requires a change in employment. I rely on the coach to tell me what period of time the person may be unemployed or whether he or she needs to be retrained during a career sabbatical. Then I align the person’s finances to support a career transition.
I want to minimize the financial stress when the clients are not collecting a paycheck. If possible, I set aside money in a working capital fund every month.
What’s that and how does it work?
A working capital fund is distinct and separate from an emergency fund; If you’re in a two-year retraining sabbatical and you have monthly income needs from a paycheck of $3,000 after taxes and have the resources, we might put aside $70,000 in reserve, and every month transfer $3,000 of it to your checking account. So it’s framed like getting a paycheck.