Financial Planning Helps You Manage a Job Transition

By R.P. Whittington

When he was laid off from his job last November after 12 years in the technology industry, Dennis McCarthy sought out a financial planner to help him make the most of his investments and give him guidance on his next move.

"I’m in the position that I’m too young to retire but too old to get a job," jokes McCarthy. "But really, I came to the realization that I needed someone to look at the big picture. Where do I go from here? Can I retire? Do I need to get a new full-time position or can I afford to work part-time? I needed answers to make smart financial decisions."

McCarthy turned to Dan Ciez, a senior financial advisor in the Jacksonville Office of Waddell & Reed Financial Services. Ciez, who began his investment career in 1993, says he has been seeing more people like McCarthy visiting his office over the last several years.

"Most of the people I see are retired or about to retire, and at the stage in life when they decide to approach a financial advisor." Ciez said. "However we are seeing an increase in people who are faced with a sudden job loss or transition and they need help navigating through it."

In McCarthy’s case, Ciez developed two financial scenarios for him to consider.

"That’s typically the approach, to look at all the individual’s assets and develop two or three scenarios, each based on the investment needs and risk-tolerance of the individual and their personal desires. Do they want to travel more and work part time? Do they want to use some of their assets to support them while they change careers?" Ciez said. "There’s a lot to consider."

Jim Swartz was offered a voluntary lay-off package from his Fortune 500 Company after nearly 30 years with his employer. He sought help from Ciez to determine whether it made financial sense for him to accept the package.

"I had some investments that my wife and I had built up since we were in our thirties, but I never took the time to look at the total picture until my company made that offer," Swartz said. "In that situation, the financial planning process was instrumental in helping me make the decision on which direction to take."

Armed with a financial plan, Swartz found that with the company’s offer, along with some modifications to his investments, he could indeed retire – which he did on February 1.

Ciez says that people are never too young to start thinking of financial planning. However, as soon as a person or couple begins to build multiple assets – which in today’s mobile workforce can occur as early as your thirties or forties – financial planning becomes more of a necessity.

"Once you have a 401(k), savings and other investments it’s a good idea to have a solid financial plan that takes all those elements into account. This way, if something does happen and you find yourself suddenly unemployed, you have a good idea of your financial options -- you’ve got one less thing to worry about."

Dennis Cliff, who was the "trailing spouse" when his wife’s job transferred to Jacksonville and they moved from Minnesota in 2001, approached Ciez to help develop a financial plan to manage the transition.

"I lost my accounting job with a large national retailer as a result of company reorganization. Between my wife and me, we had a variety of IRAs, and 401(k)s. Until I met Dan I never had someone look at our investments and make recommendations on where we were financially and what options we had," Cliff said.

"As the typical individual progresses through his or her career, they accumulate a variety of assets. Over time, these investments develop into a quasi-portfolio and the portfolio seems to define the individual’s strategy." Ciez said. "We turn that process over, looking at one’s personal situation and concentrate on strategy first. Once the strategy is defined, we then craft an overall investment architecture, and lastly complete it with individual investments. It’s a distinct and important shift in process."

Through the planning exercise, Ciez and Cliff developed a spending plan, made some adjustments in family expenditures and changed some of the investments. This enabled the Cliffs to generate funds to help out for a short period of time while Cliff found a job – armed with the knowledge of what salary he would need to maintain his family’s desired standard of living.

"Before we developed a financial plan, I had expected that we would have to take a penalty and withdraw some money from our 401(k) account, but we were able to move some things around and never had to touch it." Cliff said.

Financial advisors like Ciez are compensated for their expertise and work in different ways. Some advisors charge a fee for a personalized financial plan. The typical fee can range anywhere from $200 to $5,000, depending on the complexity of the plan necessary to meet the individual’s financial goals and expectations. Advisors may also take a commission based approach to their compensation, through the sale of investments, or be compensated through fees based on a percentage of assets. Many advisors use a hybrid approach of the above.

In choosing a financial advisor, Cliff said it is important that you feel comfortable with the person you select.

"You need someone you can trust, someone you can connect with, but someone who will also call a spade a spade and give you "tough love" when it comes to your investments and your overall plan," Cliff said. "You also want someone who has excellent investment knowledge and can offer you solutions that meet your needs; not just a ‘one-size-fits-all’ financial plan. It should be specific to you and your lifestyle."

Tom Parrillo, a recently retired engineer who met with his first financial advisor about 20 years ago, says you should expect a plan and keep up with it.

"It’s important to track your financial plan’s projected results with your actual investment results over time," he said. "Barring a major shift in the market, like the dive the market took in early 2001, you should expect results. I started with a modest investment, so it wasn’t a ton of money, but I went through two financial advisors over a five year period and none of my investments made a dime."

Parrillo said he went through three financial planners until he found Ciez..

"I used a couple of others before I finally found one who I feel really watches my investments," he said.. "When something isn’t doing what he expects he let’s me know and gives me some options. There’s a difference between a real financial advisor and someone who is just investing your money and doesn’t keep up with what it’s doing for you."

For more information about choosing a financial planner, visit the Financial Planning Association at www.fpanet.org. Dan Ciez can be reached at the Jacksonville office of Waddell & Reed at 904-448-2743.

Media Contact: Ron Whittington (904-563-0402)