Evaluating Job Offers And Opportunities (Podcast)

Ben Sullivan 00:36
Thanks for having me, Amy.

Amy Laburda
So Ben, you're a financial planner and not a lawyer, but do your clients ever come to you with a job offer, whether it's an actual contract or something less formal, and ask for your opinion or just for you to look it over to sort of see how it'll affect their financial life?

Ben Sullivan
Ideally, yes. I really want my clients to be coming to me with any kind of major financial decision they have. And I would say that a job offer is one of the biggest financial decisions that a client could be making in their lifetime.

01:04
So a lot of people will come to me. Sometimes it's such a clear offer that they don't feel the need to come to me. As you know, and as you said, I'm not an attorney. Sometimes I like to get into the contract a little bit, see if I see anything myself, but I'm not an attorney, so I'm not capable of fully reviewing a contract. So it's really more so… My clients are really in-depth relationships, quite often.

01:30
And I can consider a lot of different aspects, not just the financial aspects, of the job offer for them. So really, a lot of times [they] think of me like a sounding board. I'm someone who knows them in a unique way, that has insights into their life. But I'm kind of this odd figure as well, where I can't disclose any of the information they tell me. No one's going to find out about what they're considering. So it's almost like the role of a therapist, where it's...

01:58
it's a privileged role and they can feel confident talking to me and really opening up, where everyone else that they're going to talk to is either biased or has some kind of other skin in the game, probably. Or they just can't really talk to their colleagues about it, because they're considering making a change. So I think it's really the same as a lot of different financial decisions, where it's, hey, I'm that guy that they can come to and talk to about what's really impacting

02:28
their world.

Amy Laburda
I imagine the impulse to reach out to you is probably greater if the person is waffling, right? If they're like, “This might be good, I don't know,” or “I'm excited about this, but I'm not sure how it fits into my financial picture.” But I think sometimes with a job offer, it's not that uncertainty. It's the excitement that can get to you a little bit more.

02:47
Where you have that just impulse that you're like, “This is great, I want to go forward.” I think all of us have probably been guilty of: I have a new phone or a new app that I really want to use, and I'm just going to hit yes on the terms and conditions. Now, I'd hope most people know you shouldn't do that with a job offer. But is there any particular danger you've seen clients run into when just the sort of excitement of a new offer carries them away?

Ben Sullivan 03:12
Yeah, that definitely happens sometimes. I think it's helpful to take a step back and think about the different demographics that we work with as well. So we predominantly work with successful individuals. A lot of times, they're mid-career, late-career, approaching retirement. But we also deal with younger individuals. And I think people in different parts of their career are going to approach new job offers in different ways. So especially early on, there's considerations

03:38
where people might be just saying, “Hey, I'm looking for a certain salary. I'm graduating. There's other people who are making $75,000 a year. I want to be making $75,000 a year.” So they might just move impulsively and make a decision without really understanding all the aspects of the contract. And a lot of times these are long-term decisions. And the terms of the contract can last beyond the term of employment. So while I'll just click

04:08
“yes, I accept the terms of service” for a website without really thinking twice — that's not the best idea, but especially when it's with your job, your career, it's a long-term decision that can have impacts on your long-term financial security. So you definitely want to take a second, look through the entire contract, and be well advised, which might include having an attorney review the contract.

Amy Laburda
Yeah, I think, Ben, you and I can both attest to this, considering we're both pretty long-tenured with Palisades Hudson.

04:36
You'd agree to something a while ago and then it's still affecting your life many, many years later sometimes.

Ben Sullivan
Yeah, I searched my email and I found my offer letter from Palisades Hudson that was emailed to me 18 years ago from Larry [Elkin]. And the terms of that agreement still apply, if I was to leave Palisades Hudson. So it's definitely… 23-year-old Ben made a decision that is impacting 41-year-old Ben.

Amy Laburda
Absolutely.

05:01
So in our firm's book, The High Achiever’s Guide to Wealth, you co-wrote a chapter called “Employment Contracts.” And that chapter dives a lot deeper into the real sort of nitty gritty of what you should know before you accept a job offer, whether it's a contract or an offer letter. So because we have that chapter, I won't make you go beat by beat through all those details here, though I'll link the book in the show notes for listeners who are interested. But from your perspective as a financial adviser, are there any sort of...

05:28
greatest hits, big-picture things people should always be looking at in any kind of job offer?

Ben Sullivan
Definitely. And I also appreciate you giving us the opportunity to get beyond a little bit of the minutia from the book. I think the book is fantastic. It's a really good reference guide to what people should be looking for in employment contracts, some of those landmines that they want to be avoiding. But it probably doesn't make for the best podcast kind of, well, those details.

05:55
So really, when people are looking, I think it's important to consider the short-term pros and cons of a job offer, the long-term pros and cons. Especially for younger individuals, their future earning power is truly their biggest asset. So they might not have any real balance sheet assets at the time, but that future ability to earn income is incredibly important. So for everyone, you're deciding how you'll be spending the majority of your waking hours. And so it's a major decision

06:24
that impacts your lifestyle, your financial life. So I really think that people have to consider what they're trying to solve for in their life. So, especially when we're talking about new graduates, I'd say that they really exist on a spectrum. Some people are graduating college or entering the workforce, and they need to make sure that they're covering their short-term needs: their housing costs, their food costs, all of the normal living expenses that someone has. And then there's other people who might be having to pay down debt.

06:51
And then on the other end of the spectrum, there's a lot of our clients: children who come from a place that has some privilege and has the parents' wealth that's able to backstop them if they're not able to cover their own expenses or if something goes wrong in the job that they take. And for these people, they have a lot more flexibility, so they might not be solving just for a certain income level. They might be looking longer term, or to fill more sense of meaning in their work.

07:21
And those are the kind of decisions that you want to be thinking through before you just impulsively accept an offer. You want to think about what you're giving up and what you're getting, and how that fits into your actual long-term plan.

Amy Laburda
Sure. I think with everything in life, obviously, there are trade-offs. We love to say on this show that there are no one-size-fits-all approaches. And I assume this will not be the exception to that. But broadly, if someone is coming to you for themselves — or maybe their adult kid, if they want to get your perspective —

07:51
how would you advise them to go about balancing all of these factors you just mentioned?

Ben Sullivan
So the financial planner's favorite words, “it depends,” apply in this situation as well. I really think it is based on each individual's… it's based on the ability and willingness to handle risk. I'd say, are there family resources to drop back and depend upon if something goes wrong? How easy is it to change course if you pick the wrong job?

08:21
I really try to help my clients better understand the true financial consequences of different types of compensation. And that's kind of some of the considerations that go in. And like I mentioned before, I really try to serve as that sounding board to clients. And a lot of times — I can't make decisions for clients. I don't know what's in their best life interest. I can give them the financial consequences. But a lot of times it's just being that person that they can talk through the idea with

08:50
and help them come to their own choice on what they want to do.

Amy Laburda
So you mentioned compensation. And I think many of us work, at least in part, to make a living, to support ourselves. So compensation is pretty central for many of us when we're considering a new job offer. I think it's often tempting to use salary to compare your current job and a new potential job. It feels very apples to apples. It's a concrete number. But you mentioned “types of compensation” in your last response. So I wondered, how should job seekers factor

09:19
benefits, as well as just the base salary? Or maybe things like a starting bonus, if that's in play?

Ben Sullivan
So I think a really easy initial step is to just create a side-by-side analysis. If you're comparing two different options, you can compare the salary, you can compare the benefits, you can compare the future opportunities, the training that you might get as part of the job, and really just understand, side-by-side,

09:44
how those two compare, between the different options that you have. Maybe there's even a third option. And then I can really help people recognize the income they have in a current position, if we assume that they're already employed. And it's kind of concerning if you take a second job or a different job. Let's just say if your salary is $250,000 but you also get employer-paid health insurance for a family of four, a 401(k) match,

10:10
the right to purchase the employer's stock at a discount, tuition reimbursement. That all adds up to quite a bit more than the $250,000 that you're getting. So if you were to see, “Hey, I'm getting a 10% increase in my salary. I'm going to get $275,000.” At the end of the day, it might be a better headline number, but you still might wind up either losing out or really not benefiting from the new job offer that you're getting.

10:39
So again, you kind of want to circle back and try to understand: Why are you making this decision? It might be perfectly appropriate to make a change, but it doesn't have to be a financial reason why you're making that change. And if it is just a financial reason, then you want to make sure that it truly is a better offer.

Amy Laburda
Right. And I imagine some benefits, it's a little bit harder to plug into that comparison spreadsheet, you know, how you're valuing... You can certainly put a dollar value on

11:06
hours of paid time off that you're offered or [the] value of a health insurance plan and how much you have to pay into it. But some of the things are going to be flexibility, how your schedule is going to work, if you want to work from home some or part of the time, those kinds of things. When you have a client valuing those big-picture things, obviously, some of it is just going to be gut check, right? Like some of it is just going to be… they will have to tell you what they value. But do you usually have any sort of framing for a client who's trying to go...

11:34
balancing these benefits, some of which don't have a clear dollar amount attached to them?

Ben Sullivan
So I wouldn't say I have, like, a specific framework. I think it goes back to kind of what I was talking about before: making sure that their primary needs are met. Kind of the Maslow's hierarchy of needs kind of concept, where it's, “Hey, make sure you take care of all of your basic needs first, and then see if you're able to get to a higher level and go towards things that provide you with a sense of purpose and meaning in your life.” So really,

12:04
it is, “Hey, if both job offers give you that initial level of security, you can't give that up.” So you can't say, “Hey, I just don't want to go to an office. I'm going to work from home and make $25,000 a year.” That's not an option for most people. So long as you meet those sufficient needs, then a lot of times what I'm doing is giving people the OK to accept a less financially secure option and saying,

12:32
“Based on what I know about your finances, you have the privilege to be able to make the sacrifice with income and choose some of these more intangible benefits.”

Amy Laburda
That's totally fair. And it reminds me of sitting down with Palisades Hudson's president, Larry Elkin, for the first episode of this season. We talked about what wealth is and how you define it. And Larry made the point that

12:54
having choices is one of the big ways to sort of measure feeling wealthy. It sounds like that's certainly in play with job offers too, in that if you have that comfort or that security in your finances already, you can take a bigger leap, do something that's a little bit shakier, because you already have that safety net under you.

Ben Sullivan
Exactly. Yeah. I definitely wanted to mention Larry's first episode. I think that was a fantastic episode and really kind of got to the core of what I think about with financial planning, because it is like…

13:23
Going back to what I just said, so often people are looking to me as the money guy and they're expecting me to say, “No, no, no, you can't make this decision because it's more financially effective to make a different decision.” But what I usually do is give them the permission. “Hey, the numbers are fine. Why are you just trying to maximize your dollar income when it's not fulfilling your other needs?” So it truly is wealth is not

13:52
just a dollar on a page. It's what someone's making of their life. So when you're thinking about — your job is really going to be how you're spending the majority of your time. So you don't want to just be making that decision based on money. I think a lot of times I have clients that are in a good situation, where they're making a stable, high income, and they might decide that they want to take a step back from that high income, high probability

14:21
salary, and then look to something that has a little bit higher ceiling of an opportunity. So a lot of times a riskier venture, a startup, a company that might be offering stock options, a lot of times that gives you a big lever to allow you to magnify your wealth quite a bit. And you might have someone who has a high degree of knowledge who drops their salary by a third. But if they get enough stock options, then

14:50
that can provide them with the opportunity to 10x their income.

Amy Laburda
Yeah. As we talked about in your investment episode a little bit, the risk tolerance sounds like it really comes into play.

Ben Sullivan
Yeah. I think that's how, like we always talk about how things are tying together. And that's why the financial adviser can serve as kind of the sounding board for employment contracts, employment decisions, is because you know the client, you know how they think about risk, how secure they are in

15:19
their day-to-day life, and then you can try to guide them, but also just give them permission to do what they're interested in doing.

Amy Laburda
Sure. So you mentioned stock options, and I want to circle back a little bit briefly. Obviously, things can get kind of technical, but they're really common in some sectors, pretty uncommon in others. So it's not impossible that a worker could be running into them for the first time further into their career. For our listeners,

15:45
whether or not they're familiar at all, what are just some basics you think someone should know if they're encountering stock options in a job offer for the first time? How do they work?

Ben Sullivan
Yeah, so that's a really good question. So there are many ways for a company to offer equity to employees in the company. When you're evaluating a job offer, you'll kind of want to know some of the basics of the different types of equity compensation. So there's

16:09
what people refer to as restricted stock units, incentive stock options, nonqualified stock options, qualified small business stock. So they're all different acronyms, QSBS was the last one. It's just, it's kind of like a menagerie of different options and is pretty confusing to begin with. But really, on a basic level, it is either offering you some kind of phantom investment in the company or, in the case of options,

16:37
the option to potentially purchase shares at a set price for a company. So if a company offers you the right to purchase shares for $10 and it's currently trading at $10, that stock option is essentially worthless, because I could go out into the stock market and buy stock at the same price. But if I have the option to buy something at $10 and the stock increases to $50, that has quite a bit of value to it.

17:06
So, especially since you're not putting money into these stock options to begin with, it's a really leveraged way to increase your wealth. And a lot of times the stock options will be structured in a way where they're vesting over time, they're being issued over time, and then you have to stay with the company until a set period before you are fully vested in the options. There's a ton of planning opportunities and different income tax consequences that apply to these different options.

17:35
So it really is important to talk to an adviser to really understand what the net impact to you is. It's totally different tax consequences. And then also whether you have to actually buy the stock for the grant price, or if you just are granted restricted stock units. You just receive the stock when they vest. So it's different in terms of what kind of cash outlay there might be.

18:04
And then really one of my favorite planning techniques with equity compensation is [a] tax code Section 83(b) election that allows you to include stock in your income, even if it's not fully vested. And so that example that I was using before: If you have options at $10 and you want to include it in income then, that's going to be a lot less income than if you were to include it when it vests, when maybe it's $100 a share.

18:34
So it's a great way to kind of get the capital gains clock running on that kind of equity compensation because you get to decide whether it's taxed as capital gains or ordinary income. To put it briefly, there's a ton of planning opportunities. There's a ton of growth potential, but there's also a lot of risk. So I think, like I was saying in the example before, if someone's going to be willing to sacrifice two-thirds of their salary to take on a new opportunity that

19:03
then receive stock options and the potential for higher growth — just remember that that income that you're anticipating is by no means guaranteed. So the opportunity might wind up with just that small base salary and your options are worthless. So everyone thinks that they're going to wind up working for the next unicorn tech company, but a lot of people wind up with just options that go nowhere.

Amy Laburda
Sure. And I think now that you've sort of broken the seal on talking about taxes,

19:32
I imagine when you're talking to a client who's looking at a new job offer, a lot of these forms of compensation we're talking about, not just stock options, have different tax treatment than just base salary. When someone's considering non-salary forms of compensation, whether it's a signing bonus, or these stock options, something else, is there anything they should know about the effects on their overall tax picture?

Ben Sullivan
Yeah. So I think it's really important when you're a W-2 employee — most employees are W-2 employees, well,

20:01
all employees are W-2 employees. If you're self-employed, you wind up receiving income separately. If you're a partner, you could wind up receiving it on a K-1. But when you're an employee, you have to understand what the tax withholding is going to be against your income. So let's just say you were to get a signing bonus, a fantastic signing bonus. You got a $1 million signing bonus for joining a new company. That's going to be withheld at a 22% statutory withholding rate. But your marginal tax rate

20:30
on that income is going to be 37%, most likely. So a lot of times people are thinking that they're covered by withholding, and they are having withholding on the income, but it's not sufficient to meet the tax liability. And the same kind of 22% statutory withholding would happen with certain stock options that are vesting, or RSUs that are vesting as well. So when you're coming into these higher-income earning years, and when you're getting different types of income, you have to think about

20:59
whether you have to make estimated tax payments beyond your standard withholding as well. So that's another time where it makes sense to speak with an adviser to help with your taxes too. And then really, when you're thinking about picturing the different stock or different salary offers that you're receiving, you want to understand the different ways that you can potentially defer some of this income. So the different retirement plans that are offered by different employers will also come into play

21:28
when you try to decide which offer is better. If someone gives you the ability to contribute to a 401(k) or a nonqualified deferred compensation plan, those are ways to get your income out of your core earning years and defer it until retirement, when you're likely in a lower income tax bracket.

Amy Laburda
Yeah, we're going to have a whole separate episode on retirement planning later this season. So I encourage people to keep listening if they're interested in that.

21:54
But yeah, I imagine depending on the plan, you're going to have more flexibility to make some of those contributions, rather than a plan that's more like a profit sharing plan, where the power is more in the hands of your employer. So it's going to be a thing to consider with the offer: how much control you have over those savings vehicles.

Ben Sullivan
Yeah. And at the same time, it's kind of considering — whether it's stock options or deferred compensation, especially nonqualified deferred compensation — it's understanding what the risk of

22:22
potentially receiving or not receiving that income is. So if you're promised, quote-unquote promised, a bonus coming down the road, that's not guaranteed until it's actually received, unless it's in writing that you're guaranteed to receive a minimum bonus of XYZ amount. So when you're evaluating two different offers, that's kind of something that you want to take into account. Is there a guarantee of receiving this income? Or is there just the potential to

22:52
receive it, depending on the performance of the company or your own personal performance. So I think that's really important when you're trying to analyze between different job offers.

Amy Laburda
So while we're in the compensation area of our conversation, I think it's pretty common to see advice that job seekers should always negotiate or should negotiate to some degree with any offer they receive. Obviously, this is salary, but not only. Some people try to negotiate benefits or their paid time off,

23:20
their schedule, a variety of things. In general though, in your experience, do you generally encourage people to negotiate? How much should a job seeker be willing to push back on a given offer?

Ben Sullivan
So I think it's really helpful to know what's standard in your industry for your level of experience. I'm not going to be able to help with that, because I don't have enough experience in each individual client's career to know what's appropriate for them. So it might be helpful to have

23:47
data from that specific industry. A lot of times if someone's working with a recruiter, that can help them analyze the level of the offer. A lot of times it does make sense to negotiate, but you also want to understand that when you're negotiating, this is kind of some of the first steps and first experiences that you're going to have with this new potential employer. So you want to make sure that you keep it positive and keep it material. So you don't want to be negotiating on little tiny things that

24:17
don't necessarily matter just for the sense of, “Hey, I want to make this better. I want to be able to get a better offer.” If it's going to make you look kind of unreasonable, if you're asking for something that no other employee is getting from a company, it's not likely that you're going to get that. But it can also be a time where you understand what the culture of the company is. And if a company is not willing to negotiate with you, if they're not willing to offer you something that you think is really a requirement

24:47
for your working career, that might be the time to say, “Hey, this might not be a reasonable employer that I really want to be working with.” And it might be better to make that decision very early on, before you actually take the position, as opposed to getting there and then realizing that there's really no flexibility in the role.

Amy Laburda
That all makes sense. So

25:08
while many American workers don't have a formal contract, as such, that is legally binding, there's one area that is often legally binding in an offer, which is restrictions such as noncompetes, nonsolicitations, things of that nature. Now, as we're recording this in late 2024, the Federal Trade Commission has, in theory, banned most new noncompete agreements, though they haven't invalidated existing ones.

25:34
That ban has been, for now, stopped by a district court, and the FTC is in the process of appealing. So the future of noncompetes in the U.S. is kind of in flux right now. But assuming they survive in some form, or applying to other kinds of restrictions that haven't been struck down, what should job seekers know about noncompetes and similar restrictions?

Ben Sullivan
So I'd say these are the type of clauses that you might just glance past when you're looking at a job offer right in the beginning, where you're thinking, “Hey,” (especially if you're young), “hey,

26:03
I'm just looking for income. This is my first job out of college. It doesn't really matter.” But these can have lasting impacts on your ability to advance in your career. So really a lot of times people, when they hear noncompete, they don't fully understand what that means. A true noncompete means that you can't work for any direct competitors or set up a business competing with your former employer. A lot of times that's within geographic limitations. So

26:31
within 20 miles of the employer. But in today's modern economy, really the location, a lot of times, is not so relevant. But besides noncompetes, there's a lot of other restrictive agreements that really make sense for an employer to place in there. And you may or may not be able to negotiate from there. So really, the most basic kind of agreement that's probably going to be in most employment agreements is a nondisclosure agreement.

26:59
You can't disclose the trade secrets of your employer. You can't disclose the client list, a lot of different things like that. You can't take that with you. And that would have material harm on the employer if you were to do that. So I feel like that's a pretty logical item that an employer probably is not going to negotiate on. But it should be something that someone's thinking about. Especially if you're creating intellectual property,

27:27
or even inventing any kind of ideas, a lot of times you want to understand what your rights are to those creations if they're made in the course of your work. Usually there's an assignment agreement that anything that you're doing in terms of creative work will be for the purposes of the company. So I cannot, if I was to leave Palisades Hudson, I cannot take this recording of the podcast and treat it as my own. This is the property of Palisades Hudson.

27:56
So it's just, these are the kinds of things that someone who's signing an agreement might not think about. But if you're creating these kinds of creations, these works of art or creativity, you want to make sure that if you really value ownership of those, that you structure that into your agreement. When I think about clients forming a trust, I always tell them, I love trusts. What a trust is… It's confusing. Like, what is a trust? Who knows what a trust is? It's a contractual agreement. Just like an

28:26
employment agreement is a contractual agreement. And you can structure contracts to fit your needs, so long as they don't violate the law. So you can't have a contract that is allowing discrimination against a certain group of protected individuals. But beyond that, you have the ability to structure these contracts. And I think sometimes people go into the process thinking that the contract is just boilerplate and quote-unquote click accept. And that's the end of it.

28:55
But there are places for negotiation in contracts. And getting back to the original concept is, this is a job offer that you're receiving. The agreement that you're signing can be an agreement that has long-term impacts. So it makes sense to go through the entire thing and ideally have someone help you go through that contract. So you understand that there's different provisions that are going to apply and make sure that there's no landmines that you're walking into.

Amy Laburda 29:25
Yeah, and I imagine for these kinds of restrictive clauses, such as nondisclosure or noncompete, if you feel like they're overly broad, or if you're just not sure you fully understand it, that might be the time that you actually want to go to an attorney specifically.

Ben Sullivan
Exactly. And really, like, let's be honest, if you're starting a job right out of college and it's just going to be a one or two year thing, it might not be the career that you're looking to start.

29:50
A lot of times that's not the time when you're needing an attorney to review the contract. I don't know many people coming out of college that use one. But if you're a mid-career, late-career professional and it's a material change that you're making and… That's really going to be the time where it's, “Hey, let me make sure that I have everything in place here.” And getting to the point of contracts — I think

30:14
we sometimes are watching sports and we hear about someone, “Hey, they got a $10 million contract,” and then maybe the coach is let go, but they still have to pay out the contract. Most employment offers are not that type of guaranteed compensation. So when you're analyzing an offer, a lot of the stuff that's in there, it's details for what is expected for the near term for your career.

30:40
And it's a mutual agreement that you're making with the employer to clarify the terms of what the employment is going to be. But the stuff that's in the job offer is usually not guaranteed. So someone can change the health insurance options or change the requirements for working hybrid versus in office. So these are the kinds of things that you need to

31:05
trust the employer that you're working with. You're forming a long-term relationship with them. But just because it's in the job offer doesn't mean it's a guarantee for the long term.

Amy Laburda
That's fair. So I think we've kind of been in the weeds, despite my earlier assertion that I wouldn't take you there. So thank you for coming with me. But zooming back out a little bit, if someone is considering a job, they may be in a position where they're considering two new offers at the same time. But I think more frequently, especially mid- and late career,

31:32
what you're considering is the new offer versus your current position, your current job. When you're talking to someone who's considering making that kind of change, do you generally encourage someone to look at specific things about their current position? How are you weighing the opportunity cost of leaving versus something that's shiny and new? And you sort of have the disadvantage of your current position of… you see all the warts and the pain points, versus the new job, it's sometimes easier to idealize, I think.

Ben Sullivan 32:01
Yeah, there's a reason why the grass is always greener. And you know the problems that you have in your current position. The alternative position, there's an unlimited amount of uncertainty there. But sometimes that uncertainty is something that you're willing to give up if the pain in your current position is high enough, or if there's just not enough opportunity there. So it is kind of hard to make that decision a lot of times, and it can be a big decision to make.

32:29
And like I was saying before, that new opportunity, there aren't many guarantees that are going to be in this new job offer that you're receiving. You're kind of taking a very known position and going into the unknown. And that can be scary. And going back to my role as a financial planner, I can help the client understand how much stability they have in their current role and also quantify for them

32:58
some of the items that they might not be recognizing. So let's just say someone had taken a good job offer. They'd gotten those stock options. Those stock options are not fully vested but they have appreciated in value. There might be several hundred thousand dollars of unvested options that they're giving up in order to make this career change. And they might not fully recognize what they're giving up in order to accept a new offer.

33:25
So I can help them understand that value. And then that might be where they go back to the prospective employer and explain to them, “Hey, here's my situation. I want to work for you, but this is what I'm giving up. And can you give me a sign-on bonus? Can you replace the stock options that I currently have with options of a similar value for your company?” So that's like… You can tailor any situation to work in any way.

33:53
And there is a lot of flexibility there. So it's just really, like, I've been saying. It's one, understand your current situation. Two, prioritize what you really want. And then three, a lot of it is that emotional kind of, “Hey, what do I really want here?”

Amy Laburda
So we've largely been talking about working for other people, sort of a traditional employee structure, but obviously not everyone works for someone else. A fair number of Americans are their own bosses. A 2022

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survey from the consulting firm McKinsey & Company said that 36% of American workers self-identified as “independent workers,” which could include independent contractors, freelancers, people who sell their work directly to consumers — a variety of other people who are operating with more autonomy than traditional employees tend to have. I'm not going to dive into starting your own business. We, in fact, have an older episode about that, which I'll link. But if you had a client who was...

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had been a traditional employee, but is now considering striking out on their own as a freelancer or a contractor. Obviously that's a little bit different than considering a concrete employment offer from a new job. But do you have any sort of big-picture financial planner advice you might offer for making that change? Or is it sort of a similar weighing up process of what's important to you, but the uncertainty is just a little more front and center?

Ben Sullivan
I'd say that's a really good way of framing it, where it's a similar decision, but it's just further down the risk spectrum

35:19
a lot of times, unless you have clients that are already lined up. So it's a major change. It impacts your taxes, your cash flow, your retirement planning, your ability to get benefits, your different sources of income. So you really want to make sure that you're in a stable place, where you have the ability to get through the riskiest period, and also maybe have an escape plan in order to take on another job or pivot

35:48
if your original plan is not working like you're intending to. So you really want to make sure that you have the… enough of an emergency fund there to get you through that difficult time. And then, a lot of times, self-employment can be riskier at first, but actually less risky in the long term. Because if you're employed, you have one source of income: your employer. If you're self-employed, each client is essentially a different employer

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that is helping you achieve your goals. So if you lose one client, that's kind of like one employer, but you have all the other employers there that are helping provide the income. So it is definitely a major change. And that, again, is one of those decisions that is more of a lifestyle kind of change than it is a financial change, although it has a lot of impacts on your personal finances as well.

36:43
I saw a funny meme just recently. It said a lot of times these people who are trying to go out on their own, entrepreneurs, are swapping a nine-to-five for a 24-7. So they think they think it's going to be easier or hey, like, this is empowering. But you have to also give up your entire life in order to be able to pursue these dreams.

Amy Laburda
Right. I have several friends who freelance and I feel like you definitely have the trade-off of… You have a lot more flexibility

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in a lot of ways. You can set your own hours. You can take a day off when you want to. But there is also that omnipresent pressure in the background, especially if you're not independently wealthy, when you're starting out, where you're always having to hustle to set up the next client, meet the next customer, make sure your pipeline is full. So I feel like sometimes vacations or disconnecting becomes actually harder, even though there's no one telling you you can't take one.

Ben Sullivan 37:36
Yeah, so when we're thinking about job offers, we're thinking about vacation and how much time off you're going to have. And it's like, well, if you're working for yourself, you have an unlimited amount of time off. But if you're not working, you're probably not making money. There's probably things that are going to be having issues at a company, even if you have several employees working for you. So it is a total change of lifestyle and, kind of, setup. And then you change the roles as well. So you are now

38:06
the employer, and you're thinking about all of these employment decisions from the employer's perspective, and potentially setting out employment agreements for people that you might be hiring and setting policies for. I think it also makes sense to touch on, just for a second, is… When we're thinking about these employment agreements, I said before that you can structure the employment agreement in many different ways, so long as it doesn't violate the law.

38:32
And we're also talking about freelancing. And so there's the difference between being an independent contractor and being an employee. And so there are specific terms and requirements for being an employee versus independent contractor. So that is not usually something that you can really just say, “Hey, I'm going to treat Amy as an independent contractor, despite directing exactly how she works, where she works, what equipment she is using and how she does her job.” So that's something that can be a red flag, is when you're

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reviewing a quote-unquote employment agreement, if someone's trying to treat you as an independent contractor but also control your entire career, and that's going to be your sole source of income, it's a red flag. You might want to look elsewhere.

Amy Laburda
Yeah, it sounds like they're like, “We'd like to treat you like an employee, but also not give you any of the benefits that employees are entitled to.”

Ben Sullivan
Exactly.

Amy Laburda
So Ben, you've been on the podcast before. You know I like to finish up by throwing it back to my guest. We've obviously covered a lot of ground today.

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But is there anything else you'd like to add or sort of summarize about employment agreements or deciding on career changes?

Ben Sullivan
Yeah. So I'd say take a look at the book chapter. It's really good. It's really in-depth. There's a lot of detail in there. I find it helpful. I am not an employment contract expert, per se. I help my clients make these decisions, make big financial decisions that impact their financial life. And because of how much I know them,

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their family situation, I can serve that role. But I'm not the only person who should be advising you if you're making an employment decision. I think it makes sense to have an attorney involved, if it's big enough stakes. If you're working with a recruiter, it makes sense to take their feedback. Understand where their biases might be coming from. Listen to other people in the same industry as you are, kind of really understand what's impacting you there.

40:27
And then also, just kind of going back to Larry's first podcast, it's: Really think about what matters to you. Don't just follow the scripts that are given to you in life. Figure out what are your true long-term goals for a career and a life, and understand how different opportunities might fit into those goals. And then, as a financial adviser, again, like I said throughout this, you don't have to pick

40:55
the option that provides you with the best financial success, if it's not going to leave you feeling fulfilled at the end of the day. So long as you can meet your needs, then you should feel totally free to pursue your passions and income through a career.

Amy Laburda
Thanks so much, Ben. I hope this episode helps any of our listeners land a job that they love, where they want to spend most of their working hours every week. Thanks for joining me again.

Ben Sullivan
Thank you, Amy. It was fun.

Amy Laburda 41:25
“Something Personal” is a production of Palisades Hudson Financial Group, a financial planning and investment firm headquartered in South Florida. Our other offices are in Atlanta; Austin; the Portland, Oregon metropolitan area; and the New York City metro area. “Something Personal” is hosted by me, Amy Laburda. Our producers are Ali Elkin and Joseph Ranghelli. Joseph Ranghelli is also our director, editor and mixer. Our firm has written two books:

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Looking Ahead: Life, Family, Wealth and Business After 55 and The High Achiever's Guide to Wealth, which offers advice for younger professionals, entrepreneurs, athletes and performers. Both books are available on Amazon, in paperback and as e-books.