When the Job Changes Before the Financial Plan Does
Lessons from the Road
A senior biotech executive can leave a company on Friday and begin somewhere new a few weeks later. Financially, the separation can take much longer.
I see this most clearly with company stock. Years of compensation can remain tied to the former employer well after the executive has moved on, and over time the position begins to occupy an odd place in the financial life. It is an investment, but it came from work. That history changes how people look at it.
There is usually a story attached to those shares. The executive may have been there when the company was smaller, when a program was still uncertain, when the outcome everyone talks about now was years away. They understand the business in a way most investors never will. That knowledge can make the stock feel different from everything else they own.
I think advisors have to respect that before getting into percentages.
A concentrated position is easy to identify on a statement. Deciding what it should become is harder, because the financial question has already picked up pieces of the career along the way. Selling can feel premature even after the executive has decided to leave the company itself.
Then the new job starts.
The interesting part is that the balance sheet can still be largely built around the old one.
That can matter more in biotech and pharmaceutical careers because equity compensation often grows into a meaningful part of wealth over time. Once another compensation package begins accumulating at the new company, an executive can end up carrying more exposure to a narrow corner of the market than intended. The companies may be completely different businesses. The financial risks can still overlap in ways that deserve a closer look.
I usually want to understand the old position before deciding what should happen to it. How much of the family’s future has quietly become dependent on that stock? That question tends to lead somewhere more useful than simply asking whether the executive still believes in the company.
Belief and concentration are different things.
Someone can remain deeply confident in a former employer and still decide the position has grown beyond the role it should play. That distinction can take time to work through, especially when the stock has been a major source of wealth.
Tax planning enters the conversation here, although I rarely think it should lead it.
A large embedded gain can make an executive hesitate to sell. That hesitation may be perfectly reasonable. It also deserves to be considered alongside the risk that caused the conversation in the first place. The tax consequence of a decision matters, but so does the consequence of allowing one position to continue carrying an outsized share of the financial plan.
This is where I like having the CPA involved early.
The conversation becomes more useful when everyone is looking at the same year rather than dealing with each decision after it happens. An investment move can alter the tax picture. The tax picture can affect how quickly a position is reduced. That might change again once the executive’s new compensation begins to settle into a more predictable pattern.
Plans move because lives move.
I have seen people treat a career transition as if the financial work begins once the new job feels settled. I tend to see it the other way around. The unsettled period often tells us the most, because assumptions that made sense under the previous employer are suddenly exposed.
A family may realize that the old stock was doing more work in the plan than anyone had consciously assigned to it. That realization can be uncomfortable. It can also be useful.
There is rarely a need to force every decision into the first few months of a transition. Sometimes the best planning starts by understanding what changed and letting the rest of the picture catch up. A career decision made for professional reasons can eventually alter retirement timing, risk tolerance, and the way the family thinks about wealth that once felt far away.
Those connections usually reveal themselves slowly.
That is part of why I enjoy working with executives through these transitions. The financial questions rarely stay inside the category where they began. A conversation about company stock can eventually become a conversation about what the executive wants the next decade of life to look like.
The stock is still there, but it just means something different now.
Contact Info
Leon Shelton
Shelton Madsen Wealth Management Team
(610) 810-0444
Wayne@kingsview.com
Investment advisory services are offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser. Insurance products and services are offered and sold through Kingsview Insurance Services, LLC (“KIS”), by individually licensed and appointed insurance agents. KWM and KIS are subsidiaries of Kingsview Partners.
