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‘I Quit!’ How Advisors Are Guiding Clients Through the ‘Great Resignation.’


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By Cheryl Winokur Munk
Oct. 14, 2021 11:16 am ET

With more people looking to switch jobs, financial advisors are increasingly being
called in to consult. A record 4.27 million workers quit their jobs in August,
according to preliminary data from the U.S. Bureau of Labor Statistics. That’s up
from 4.03 million in July—another record-setting month—and the previous
high of 3.99 million people in April. This pandemic-induced phenomenon has been dubbed
the “Great Resignation.”

Quitting is also on the minds of many Americans who haven’t yet taken the plunge. A
whopping two-thirds of respondents polled in late July and early August professed an
interest in switching jobs, according to the survey conducted by wealth management
company Personal Capital and Harris Poll. Younger people, in particular seem to have this
itch: A notable 91% of Gen Zers and 78% of millennials, compared with 47% of Gen Xers and
45% of baby boomers, the survey found.

Of course, financial advisors aren’t always active participants in the job hunting process;
sometimes clients only clue in their advisors after the fact. But, these days, with switching
jobs becoming more commonplace, advisors say clients have been more proactively asking
for their advice, and advisors, too, have been broaching the subject more often in their
regular client discussions.

“We are definitely not career advisors, but we help people think through the financial
impacts of their decisions,” says Katia Friend, regional managing director of client strategy
at BNY Mellon Wealth Management.

Advisors say they bring to the forefront easy-to-overlook items that can have a big impact
on a client’s finances. For example, differences in health insurance, 401(k) benefits, and
other types of compensation can make a good offer seem less ideal, or vice versa.

Michael Schwartz, president and chief executive of Magnus Financial Group, also reviews
the benefits clients select, including life and disability insurance, to ensure coverage
amounts will be adequate. He discusses whether they will need Cobra (a federally
mandated health insurance continuation program), the specifics of their new retirement
plan, the company match, if any, how to invest accordingly, and what to do with the
previous retirement plan. He also reviews their Social Security payments to help ensure
clients aren’t overpaying into the system.

Sometimes the conversation involves cash flow, particularly for clients who will have higher
overall compensation, but a lower base salary, in their new job. Although they’ll make more,
the bonus might not be paid for 12 months. “For some clients, this could mean a cash flow
crunch,” he says.

Switching jobs while the client is in the midst of home financing can also throw a wrench
into an otherwise smooth process, so that’s another topic advisors should broach, Schwartz
says. You don’t want to risk having a refinancing fall through or have a mortgage denied, he

Advisors should also be sure to ask whether clients expect to be out of work and for how
long, says Bryan Pinsky, president of individual retirement at AIG Life & Retirement, a
division of American International Group. If there will be a gap, advisors should discuss
with clients how they plan to address it, such as through unemployment, consulting
income, or personal savings, he says.

Extra expenses. Conversations should also be around costs that may be associated with
the job move, such as commuting or additional educational requirements, and how these
extras will be covered. There could also be specific tax questions that may arise. If a client
doesn’t expect to work for a while and his or her tax bracket will be lower, it might be worth
considering a Roth conversion, for instance, Pinsky says.

Sometimes it helps when clients can visualize the various financial components so they can
better weigh the risks and rewards. Friend of BNY Mellon Wealth Management gives the
example of a female apparel industry executive who was contemplating leaving her job.
Leaving meant giving up significant compensation because of timing-related issues with
her company stock. After reviewing financial models that her advisors prepared, she
decided she could afford—and was comfortable—taking the leap.

For clients thinking of starting a business, advisors should ask about their capital needs and
how long it might be before they can generate their first paycheck, says Andrew Crowell,
vice chairman of wealth management at D.A. Davidson & Co. It’s also important to discuss
how they’ll manage financially during this in-between time, an important detail that can
easily get lost in the excitement of starting anew, he says. If clients are open to it, advisors
can also make referrals to tax or legal professionals or to others who can help them bounce
around ideas.

Young adults. Sound advice regarding job hunting is especially important for younger
clients who may not be as financially stable and also may be more impetuous.
Amid the pandemic, Josh Simpson, vice president of operations at Lake Advisory Group,
says he’s been having more conversations with friends in their 30s and 40s who are
unhappy in their jobs. Most times, his advice—the same he gives to clients—is not to quit
until they have another job lined up.

Instead, he tells them to look at a series of potential worst-case scenarios, starting with the
idea that it could take six months or more to get a job. He goes over their monthly expenses
to see if they have enough saved. Typically, he finds, people haven’t thought about it in
those terms. Once they realize they don’t have an adequate safety net, they often decide they
are going to stay put until they can find something else.

“Quitting just because you think something better is out there is not a good idea,” he says.