When a client changes jobs, this change can come with a number of changes that might impact their financial situation, both in positive and negative ways.
In this checklist we focus on reviewing the potential financial impact of a job change on your clients, including:
Cash flow and income
- Will the client’s income and cash flow change due to their compensation from the new job?
- This could impact their monthly budget causing the need for a new income and spending plan.
- Your client should review the benefits offered by their new employer, especially health insurance, to see if the differences are significant and will impact their financial situation.
- If they still have FSA dollars left with their former employer, be sure they use this money so as not to lose it.
Retirement plans and deferred comp
- The client should decide what to do with their 401(k) with their old employer. Additionally, they will want to be sure to deal with any stock options they may have as well as any deferred compensation via their former employer.
- The client should review the 401(k) with their new employer and be sure to contribute as soon as they are eligible. They will want to review the investment options and make choices that align with their overall portfolio.
Other planning issues
- Will the client’s new compensation cause them to be in a different tax bracket? Be sure they adjust their withholding accordingly and look at any related tax planning issues.
- Will the client be subject to any type of non-compete or other restrictions as part of their new job?
This is a comprehensive checklist of the types of issues that advisors should be discussing with their clients who take a new job. This change can come with any number of financial issues, your planning can help the client make the most of this change in their lives.