Considering a Job Change? Keep These 3 Things in Mind

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By Greer Smith, CFP®

You’ve been thinking about making a job change. You’ve polished your resume, made some tweaks to the LinkedIn profile, and ramped up your networking. After nailing a few interviews, you now have an offer in hand. What’s next?

If you’re like some employees, your compensation package no longer consists of a base salary plus a holiday bonus that could either pay for the backyard swimming pool or get you enrolled in the jelly of the month club. You probably still have that base, but maybe the bonus is driven by some combination of company metrics and your own.

You have restricted stock awards that vest annually, semi-annually, quarterly, or even monthly. You leave future vests behind you when you step away and change jobs. Maybe you have options, or maybe you have a combination of restricted stock awards and options. You might even be able to choose between Restricted Stock Awards and Options or elect for a combination of both at your annual review.

Then there is the Employee Stock Purchase Plan, the Deferred Compensation Plan, the 401(k) with company match, the car allowance, and the parking reimbursement. There might even be a few pensions still left out there and don’t forget you have four weeks of vacation, you qualify for a sabbatical in another two years, and you can bring your dog to work. Simply put, there’s a lot to consider when changing jobs.

If you take a moderate blow to the household income statement in the near term, what does that do to your ability to retire at a reasonable age and get your kids through school?

1. Moving to a new state

Compare your current situation with the new job offer that moves you to a state with a lower cost of living and state income tax. Will the concessions for moving expenses cover the commissions and excise taxes you would pay to sell your home?

2. The new stock offer

How does your new stock offer compare with your current deal? It’s usually not an apples-to-apples comparison. What happens if stock in the new company soars and your current company grows at an average rate? How is that different if you have options versus restricted stock? Will the new company provide you a signing bonus for walking away from those equity vests that are starting to stack up? What does the difference look like this year? What about 3-4 years from now?

3. Household income

If you take a moderate blow to household income in the near term, what does that do to your ability to retire at a reasonable age and get your kids through school?

In addition to analyzing the variables in an objective side-by-side manner and projecting them out over time (or have a Personal CFO to do it for you), you should also think about some other factors when considering a job change:

  • Team: Do you know and trust your partners? How comfortable are you with the people you’ve met thus far? How about the board? Do the board members bring the right types of experience to help grow the company?
  • Culture: If you’ve never had it at a company, you don’t know what you’re missing. If you have it or think you have found it, what is it worth to you? What is morale like?
  • Target Compensation: What is either company intending to pay you? Knowing this can help to clear up ambiguity and intentions relative to future outcomes.
  • Separation: You are headed in with the best intentions, but what happens if it doesn’t work out? Will the new company agree to a pre-determined severance if both parties act in good faith?
  • Future Equity Grants: Broadly speaking, will the sign-on stock grants (options and/or RSUs) continue yearly or should you expect some multiple of the original grants if all goes well at your annual review?
  • Insurance: What are you paying at your current job for health, disability, and employer-sponsored coverages? How good are the coverages and what is the cost relative to the offer?
  • Stage: Is the company firing on all cylinders or are you stepping into a turnaround? Will your equity stake become diluted? What does the company’s balance sheet look like? If it is private, how is the value determined? When was it last determined? What is the growth target or what does success look like in five years? Are your definitions in alignment?

This certainly isn’t an exhaustive list of the factors you should weigh when considering a job change, but we hope it gives you a sense of the complexity involved in such decisions.

Looking for advice specific to your situation? Reach out to one of our advisors today.

Greer Smith serves as an advisor at Brighton Jones.

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