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Insider Tips From a Top Financial Professional on How to Nail Your Career Transition

Fears about money preventing you from transitioning to the career of your dreams?

On the one hand you have financial responsibilities: San Francisco rent or a mortgage, perhaps a family, bills, and a future to save for.

On the other hand, it is painful to imagine waking up a year from now in the same job, feeling just as miserable as you do now.

Managing your money as you shift into a new career can be overwhelming and confusing, but it doesn’t have to be.  

If there’s one thing I love to do as a career coach, it’s to face fears head on.  

With that in mind, I sat down with Dan Beck, a financial professional with AXA Advisors in downtown San Francisco to get the inside scoop on what a sound financial strategy looks like during a career transition.

Betty Kempa, CPC, ELI-MP:  Tell me about a recent success story you’ve had with a client you’ve transitioned out of a corporate job.

Dan Beck, CFA:  I helped a woman transition out of a corporate career into working on a startup with her husband by providing her with portable life insurance, reviewing her financial goals to make sure she stayed on track, and guiding her on retirement accounts. 

Betty Kempa, CPC, ELI-MP:  What are some financial considerations a woman making a career transition needs to take into account? 

Dan Beck, CFA:

401(k):  The first is that once she leaves her job, she can now take her employer’s 401(k) and transition it into a traditional (or Roth) IRA which will may have more investment options and lower fees. All considerations should be taken into account to make sure this is suitable for the client.

Stock:  The second consideration is that many corporate women wind up with large concentrated positions in the stock of their employer, whether that be through restricted stock or options. Oftentimes while working at the company she might justify this concentration feeling that she understands the company and the stock better than the public. Another excuse for not selling is if she feels that selling out and diversifying might be seen as disloyal to the company and might not look good to her boss or peers. Sometimes there are even restrictions on selling for employees.  

Since most  of these considerations do not apply once she leaves, it is a perfect time to research and consider putting  money into a more diversified portfolio, which might be better aligned with her investment goals and potentially less risky. 

Betty Kempa, CPC, ELI-MP:  What financial advice would you give a corporate women who is transitioning out of her current role to her “dream job” that pays less?

Dan Beck, CFA:   First and foremost, it’s important to have a plan in place since income can drop precipitously, and no longer be recurring, when transitioning out of a corporate job. Proper planning includes implementing steps both before and after the job transition occurs.

Pre-leaving corporate job:

Step 1:  Perhaps the most critical element of job transitioning is insurance coverage. Two types of insurance that many corporate jobs offer are life insurance and disability insurance. It’s important to make provisions for “portable” life and disability insurance, “portable” meaning insurance from a third-party carrier, since these benefits will be discontinued by the company once the client leaves. 

Step 2:  Additionally, putting together an achievable budget, and a cash cushion, are critical. 

One way for a client to increase her cash cushion before she leaves is to minimize her 401(k) contributions to just the company match starting a few months before transition. Often, the 401(k) contribution is on auto-pilot (many plans just increase the contribution 1% every year by default). The client needs to call the HR department to figure out what the match is and contribute up to that amount as the match is a 100% return on her money. 

Step 3:  Finally, the time before leaving a job is the time to apply for credit that will potentially be needed during the transition. This is because most creditors will look more favorably on having a steady income. This would include opening a home equity line of credit if they own a home, and also applying for higher credit limits on existing credit cards, or taking out new cards. (Yes, applying for additional credit might have a slight hit to your credit score, but probably worth it.)

After leaving corporate job:

Step 1:  When you’re between jobs you want to conserve cash, even if you will pay more over the long run, so that means paying the minimum on your credit cards, car payments, etc. Or using money from the home equity line to pay those off if they are a higher interest rate. 

Step 2:  When it comes to life insurance, while term and whole life do not often have flexible options, any type of universal life policy (to include indexed universal life and variable universal life) has flexible premiums, so these premiums can be discontinued temporarily to conserve cash, as long as there is enough cash value in the policy to pay the costs. This isn’t recommended but it is an option if your policy can support it. I’d suggest you reach out to your financial professional before doing this. 

Step 3:  Finally, while this is true whether you are job transitioning or not, it is especially important while in a transition to shop around to maximize the interest on your savings. 

Betty Kempa, CPC, ELI-MP: For the women transitioning out of corporate america into an entrepreneurial role – how would you advise her to handle retirement funds? 

Dan Beck, CFA:    The key with retirement funds is to keep them working towards the goal of retirement. It sounds obvious, but too many people raid their retirement funds when switching jobs since 401(k) accounts can be withdrawn, through taxes will have to be paid. 

A client’s retirement funds should stay allocated in accordance with the plan put together by the client’s advisor. 

It is probable that the amount contributed to retirement accounts might decrease during a job transition, but touching the actual accounts themselves should only be done in dire emergencies. 

Betty Kempa, CPC, ELI-MP:  This has been incredibly helpful  Final thoughts?

Dan Beck, CFA:  Financial stress during a career transition can be mitigated by working with an advisor to put a well-designed plan in place for your financial affairs.

About Your Expert, Dan Beck, CFA:

Dan Beck is a financial professional at AXA Advisors in the San Francisco office. He has over nine years of financial services experience. Previously, from 2012 to 2015 he managed Beck Investment Partners, a fundamental value investment partnership. Prior finance experience includes work at Parnassus Investments, State Street Bank, and Starwood Capital Group. Before starting his finance career he spent seven years as a Navy officer, including three deployments to the Persian Gulf on a destroyer and cruiser. He is a CFA Charterholder (considered the “gold standard” by The Economist magazine), teaches in the CFA Society of San Francisco review curriculum, and is Series 7 and 66 licensed. Dan holds an MBA from Harvard Business School, an MA in History from the University of Maryland College Park, and a BS (with honors and with distinction) from the United States Naval Academy

From Dan’s time in the Navy, his experience of maintaining calm in high stress, high pressure situations (often when there were lives on the line) is one thing that distinguishes him from other financial advisors. His education and credentials are another. There are a select number of financial professionals  that have MBAs from top institutions, even more that hold the CFA designation, and an even smaller number maintain their knowledge base by teaching in a review course. His passion for the industry and function is a third. 

Dan’s background as a fundamental active investment manager gives him a unique perspective on the challenges of implementing active management solutions in client portfolios.

Want to work with Dan?

Email daniel.beck@axa-advisors.com for more information.

Daniel Beck offers securities through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC.  Annuity and insurance products offered through AXA Network, LLC. AXA Network conducts business in CA as AXA Network Insurance Agency of California, LLC, in UT as AXA Network Insurance Agency of Utah, LLC, in PR as AXA Network of Puerto Rico, Inc. AXA Advisors and AXA Network do not provide tax or legal advice.   AGE-141181(11/18)(Exp.11/20)

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