By Richard W. Stout III
Our clients’ successes are the reason we do what we do. Because our relationships with our clients are built on deep understanding, mutual respect, and earned trust with one another, we celebrate our clients’ successes as if they were our own (which, in our eyes, they are). Below, we describe how we helped one couple, Martin and Claire, (1) weigh the pros and cons of a seemingly attractive opportunity to choose the best option that would help them achieve their goals.
Martin and Claire were in their early 50s and had been clients of our firm for five years. Claire worked as an executive at a Fortune 100 financial services company, while Martin owned and managed their multi-generational, family-owned commercial real estate company. Both are very good at what they do, but their jobs required them to sacrifice precious time with each other and their family. They dreamt of retiring early so they could enjoy as much time as possible together.
The scenario we’re about to describe began when Claire was recruited by another financial services institution that made her an attractive job offer. At face value, the offer appeared to be a wonderful opportunity. This position granted a larger salary than what she was currently making plus an enticing sign-on bonus. At the time, it seemed like a no-brainer that she should accept.
However, given the time and sacrifices they had each made in their careers, one of the couple’s biggest priorities was to be able to retire early, which we had built into their comprehensive financial plan. Their goals also included paying for their child’s college education, purchasing a retirement home in Arizona, and being able to live comfortably even after retiring early.
Before making a decision about the job offer, Martin and Claire called us to discuss how this transition might impact their goals, especially in terms of early retirement.
How We Helped
To help Martin and Claire sort through the complex nuances of this decision, we reviewed the solid financial plan we had built and maintained to work toward the important goals they have. We decided to evaluate the positives and negatives of Claire’s new opportunity, as well as how their future goals might ultimately be affected if she were to take it.
We discovered that the greatest benefits to the new position were the higher salary and the signing bonus. The negatives, however, included the fact that Claire would forgo substantial stock awards if she left her current employer. Additionally, the tax implications of the signing bonus were significant, especially when combined with the loss of the stock awards.
We determined that if Claire took the new position, the net impact would result in a high probability that the couple would not be able to retire at their target age of 58 with their desired income level. As stated before, this is and has been one of their top priorities.
Initially, the new job opportunity appeared like a great “next move” for Claire’s career and the couple’s financial goals. But upon conducting a full, informed analysis using their existing financial plan as the blueprint, the better long-term option was for Claire to remain in her current position.
This outcome was not what Claire and Martin had initially expected, but the couple used the planning process to determine and understand the consequences of the two options. Having a good command of all variables—and the interplay between each variable—enabled this couple to make a decision based on reason and probability rather than emotion and the initial attractiveness of the “up-front money” from a higher salary and signing bonus.
Subsequent to this decision, Claire elected to stay at her current employer and was actually soon promoted to an internal position. With her increased compensation from the promotion, Claire and Martin further solidified the likelihood that they would be able to meet their goals, most importantly, early retirement.
Throughout your life, you’ll be confronted with various opportunities or difficulties that will have an impact on your goals for the future. The decisions you make will almost never be black or white and will often consist of multiple intertwined variables. Unsurprisingly, our emotions are not always the best guides when it comes to making these decisions. So if you can’t rely on your emotions, what can you do?
At Benchmark Wealth Management, LLC, we’re committed to helping you examine each and every component of your possible decisions to determine the most appropriate outcome that will help you reach your goals. Instead of relying on intuition, let us help you approach your tough decisions using principles of reason and probability. To find out how we can help you, please call 860.434.6890 or email me at firstname.lastname@example.org to schedule a consultation.
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary (AIF®) designation. He has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning and holds the Master Planner Advanced StudiesSM (MPAS®). He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. He also completed the Accredited Wealth Management Advisor (AWM®) program through the Estate and Wealth Strategies Institute at Michigan State University. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
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(1) Names changed for confidentiality