Starting a new job adds several items to your to-do list as you learn the "lay of the land" with new systems, new processes and, of course, the best lunch spots near your new office. Amid this hustle and bustle, it's easy to overlook scheduling a meeting with your financial advisor, but this oversight could lead to headaches down the road.
Experts recommend meeting with your financial advisor anytime you make a major life change—marriage, divorce, kids starting college—and starting a new job is no exception. That's because shifting jobs often impacts more than just your take-home pay; for instance, it can impact your retirement savings, insurance coverage and other benefits.
Your financial advisor can help walk you through these changes to your finances and make sure you're on the right track to meet your goals, according to Ron C. Keever, regional sales manager for Colorado and New Mexico at BOK Financial Advisors. "If you're changing employers, there might be retirement assets (such as in a 401(k) account) at your former employer that need to be reviewed and discussed," he said.
Not reviewing these assets at the time of a job change can be costly both in the near- and long-term, according to a recent study by Captalize. As of May 2021, there were an estimated 24.3 million forgotten 401(k)s holding approximately $1.35 trillion in assets, with an additional 2.8 million 401(k)s left behind each year, the study found.
Meeting with your financial advisor can help you avoid being part of that 2.8 million. Once you have taken that crucial first step of scheduling the meeting, here are some other actions you can take to get the most out of it.
Step 1: Gather your documents
You should bring "any recent statements that you can get your hands on" to the meeting, including bank and brokerage statements, as well as any insurance policies, Keever said. If you can't bring the statements themselves, then writing down the amounts in each account and where the accounts are held will suffice, so that the advisor can at least get a general idea.
For example, you can discuss your options for retirement assets held in your previous employer's 401(k). If you had more than $5,000 in your 401(k) at the time you left your old employer, you have four options:
- Leave the assets in your old 401(k), but you wouldn't be able to contribute more to the plan.
- If your old plan allows it, you could move the assets over to your new employer's 401(k), so that all your retirement assets are in one place.
- You could choose to cash out your old 401(k), but you will have to pay taxes on the money and, if you are younger than 59-and-a-half, you also will have to pay a 10% early withdrawal penalty.
- Finally, you may decide to roll the funds over into an Individual Retirement Account (IRA) instead.
You can learn more about these options in this guide provided by BOK Financial Securities, Inc.
Step 2: Consider how the job change may impact your goals
During the meeting, your advisor is going to ask a lot of questions about what's important to you because they want to make sure that you are still on track to meet your short-, intermediate-, and long-term financial goals, according to Keever.
“You're making a large financial change in your life. You may be taking on new income or a different income and may or may not understand the benefits that are offered. Meeting with an advisor can help you decide how best to plan and also make sure that this change in your life is being taken into account.”- Ron C. Keever, regional sales manager for BOK Financial Advisors
For instance, if you know that you're going to be purchasing a new home in two to three years, your advisor can make sure that you're saving money on pace to meet that target and that this money is being held in the most appropriate investment vehicles for doing so. For intermediate goals such as that, "You wouldn't take as much risk (as you would for longer term goals) because you can't afford to really lose. You don't have the time horizon to gain back the losses," he explained.
Step 3: Don't forget about insurance and other benefits
In addition to discussing your retirement plan options, you may want to talk to your advisor about the insurance policies and other benefits provided by your new employer because they, too, may affect your finances.
And it's not all just health and life insurance anymore. Employers increasingly are offering a range of voluntary benefits to meet the needs of a diverse workforce and address trends, a 2021 Willis Towers Watson survey found. For example, 78% of the 446 employers surveyed said they plan to offer identity theft insurance in 2022 and beyond, compared to 53% in 2021. Meanwhile, 69% planned to offer pet insurance in the future, versus 47% in 2021.
Plus, employers are increasingly looking at pay-related incentives, such as signing bonuses, and non-pay-related incentives, such as flexible work arrangements, to attract talent during the labor shortage.
"An advisor can walk you through the benefits and make sure that you're making the elections that are right for your situation and goals," Keever said.
Step 4: Go with questions … and an open mind
Lastly, your advisor shouldn't be the only one asking questions during the meeting; rather, you also should bring any questions or concerns you have about investing or financial planning, he suggests.
If you don't know what to ask, that's okay, too, because one of the most important things you can bring to the meeting—in Keever's words, "is an open mind and a willingness to listen."