A Woman’s Financial Guide to Successful Career Transitions

Finding your grip through your career transition

When I first started my professional journey as a marketing manager at a major tech firm in the early days of Silicon Valley, there weren’t many well-lit paths of growth opportunities for women.

We had to run twice as fast and lift twice as much to make the career gains and earn the compensation many men in the same industry received. And once we did, finding somebody we could identify with to help us manage our hard-earned wealth was equally difficult. It took me years to find a reputable, independent financial advisor whom I could trust. The problem was there weren’t many financial advisors who understood women’s concerns back then.

Today, while we still have to work hard to make professional gains, the world is evolving to hire and promote more women executives, seat women on boards, and finance and support women entrepreneurs — meaning more women are creating their own wealth. And there are a greater number of female financial advisors who can help them create a holistic financial plan.

I’m one of them. My journey from start-up marketing, to venture capitalist to wealth advisor has been a momentous career transition. I know first-hand how difficult it can be to make the switch while also trying to manage a household and care for family. Many women, even with prolific income, can’t outsource those personal responsibilities. But you can outsource the financial management.

There are many details to consider as your professional life gets more financially complicated. So your career transitions go smoothly and successfully, this guide will walk you through some of the important details:

• Long-term financial planning
• Equity compensation
• 10b5-1 plans
• High net worth investing
• Owning your own business
• Retirement planning
• Serving on boards
• Finding a wealth manager

Career transitions and the importance of a financial plan

Wherever you are in your career journey, my first and most important piece of advice is to always have a financial plan. This plan should be comprehensive, focusing on your own personal goals as well as your family’s needs. You need to be thinking near-term and long-term. In general, the financial planning process encompasses net worth and cash flow, investment strategy, tax minimization, estate planning, retirement planning and insurance review.

And while this plan should be comprehensive, it should also be flexible. We all know that our best-laid plans don’t always turn out the way we expected. Sometimes, it could be great news — you just got an unexpected job opportunity that significantly increases your salary; you’re getting married and will have a two-income household; children come into the picture, and then grandchildren.

And then there are the unexpected changes that turn your life around — a death in the family, a mass company layoff, a natural disaster or health challenges.

A strong financial plan that’s reviewed regularly can help you meet unexpected changes and make sure your most important goals stay on track. And at some point, when you know you’ll have excess assets to meet your family’s long-term needs, you may require a more comprehensive estate plan to pass assets to others and minimize estate taxes. It could include strategic philanthropy planning with the formation of trusts or foundations.

Congratulations! You’re finally well-compensated for your hard work. Now what?

As you climb the corporate ladder, your compensation becomes more than a regular paycheck. Stock options and other forms of deferred compensation come into play. These provide new tax challenges as well as the risk of concentrated wealth.

Common forms of stock compensation include:

• Incentive stock options (ISO) — You don’t owe ordinary income tax from day one of receiving them. When you exercise them, you pay the lower Alternative Minimum Tax on the difference between the strike price and the market value when sold.
• Nonqualified stock options (NQSO) — You pay ordinary income tax on the difference between the day you exercise and the market price when sold.
• Restricted stock units (RSU) —RSUs are put on a vesting schedule and commonly vest only upon satisfaction of both a service condition and performance condition.
• Illiquid stock — Shares in non-public, closely held companies. The value is locked up until a liquidity event occurs.

Each one of these has their own complicated tax treatment. It’s hard to know when to exercise them and whether to hold or sell. You need a wealth advisor who understands these forms of compensation and how to incorporate them into your overall portfolio.

If you believe your company will experience a liquidity event, such as a merger or IPO, starting long-term planning early is recommended to optimize your gains through efficient tax strategies and minimize concentrated wealth risk, especially during periods of high volatility.

10b5-1 plans: What you need to know

If you are a high-ranking executive or director in a public company, you may need to file a 10b5-1 plan. This refers to a Securities and Exchange Commission rule that is designed to prevent insider trading. You file a form with the IRS that establishes when you will sell a certain amount of company stock on a certain date or time period or at a specific price. It protects you from being accused of insider trading if you should happen to sell shares just before the price tanks. Conversely, you may not be able to cash in on great gains in the interim. An experienced advisor should recommend a disposition time table and file the form for you.

High net worth investment strategies

As your assets grow, you will need high net worth investing strategies, with a sharp eye toward a balanced portfolio that aligns with your risk appetite. The Fidelity Investments’ Women & Investing study found that while a majority of women feel confident managing day-to-day finances as chief financial officer of their household, they are less confident when it comes to long-term investing. Only 19% feel confident selecting investments that align with their goals. And 77% believe they would feel more confident about their financial future if they had a financial advisor’s help.

Women often feel insecure about investing because they have trouble finding an advisor who understands their concerns and goals. Women who are brought up to save rather than invest tend to be more conservative than men when it comes to investing. Don’t be afraid to shop around for a registered investment advisor who respects your accomplishments, speaks your language and makes you feel comfortable talking about money and your dreams. You want to feel assured that your investment portfolio aligns with your long-term financial goals. A globally diversified, value-oriented portfolio will help ensure your financial goals and dreams are met.

What female entrepreneurs need to consider

Women owned about 1.2 million businesses (20.9% of American firms) in 2019, according to the latest study by the U.S. Census Bureau. Representing a 1% increase from 2018, it’s a slow, but steady climb.

Running your own business presents a host of other unique financial challenges, particularly regarding tax planning. For example, you may want to consider qualified small business stock (QSBS) and the capital gains tax advantages they have.

Or you may be able to take the deduction for qualified business income, also known as pass-through income.

Additionally, your business often is your largest asset, and so that should be considered as part of a balanced investment portfolio.

At some point — maybe it’s seven years from now, maybe it’s when you retire — you will need to plan an exit or succession strategy for the business.

As an entrepreneur, you have a million other things to concentrate on. Having a wealth manager who works side-by-side with your tax advisor is key to understanding how your business income affects your personal income — and goals.

Planning for a rewarding life in retirement

When you’re ready to retire from the C-suite, it’s important to have an exit strategy from the company. Be sure to review your financial plan for the following:

• Do you have enough money to retire? — Women tend to live longer than men. So be sure you have enough savings and investments to maintain your current lifestyle, care for your health, and do all the things you want to do.
• Family considerations — You’ll want your plan to take into account the needs of any children, minors or adults, as well as the financial needs of other loved ones.
• Does your estate plan reflect your goals and desires — Sometimes “enough” means more than basic expenses. A wealth manager who appreciates your full vision for retirement and beyond — the legacy you want to leave — should come into the picture. This may include strategic philanthropy planning.
• Insurance needs — In addition to healthcare insurance, consider if you need a long-term care policy or extra liability insurance for serving on boards or hosting fundraising events.

Before retiring, take at least six months to consider what the next chapter of your life looks like.

Staying professionally active by serving on boards

My experience is that most successful, driven women don’t stop working after they retire. They still want to apply their skills and talents toward something new and rewarding.

Do you want to continue earning income with side projects or by serving on a for-profit board? Maybe volunteering on a non-profit board would fulfill your philanthropic goals.

Serving on a corporate or not-for-profit board can be a rewarding way to contribute to organizations at a high level. Prepare to serve on boards by talking to as many CEOs or board members as possible. Make sure you can add value in a particular area of focus. Also, get some training on corporate governance by enrolling in specific programs that train board directors. The National Association of Corporate Directors or other universities offer training on how to be a board director.

All income, costs, tax implications and risks should be identified and incorporated into your financial plan.

Hiring the right financial advisor: Finding an advocate

Successful women who are going through career transitions truly do have more complex financial situations to manage. As you experience career transitions and eventually reach your professional goals, having an advisor by your side can remove some of the stress from your life so you can focus on other important matters.

Today, women have so many more options than they used to, and that includes finding respectful, unbiased financial advice. A fee-based registered investment advisor is required to act in your best interests.

Search for a wealth manager who has been through the experiences you are facing and can relate to them in order to help you create value over the long term. You want an advisor who is not just smart at managing money and investing, but somebody who understands the importance of aligning who you are with where you want to go.