Stop. Don't Move.
A friend of mine recently retired after thirty-seven years of working for the same employer. I saw him last week, and he was excited to explore his next chapter; though undecided as to what he will do, he has plenty of time to figure it out.
January is a popular month to change jobs. My inbox is filled with job hunting sites wanting my resume because employers are hunting for new candidates. After talking with my friend and receiving unsolicited emails about changing jobs, I wondered if it makes sense to make a move.
My uncle has worked for the same employer since the early 1960s. My sister has taught in the same school district for her entire career. Mark Few, head coach of the Gonzaga men's basketball team, has been coaching at the school since 1989, becoming the head coach in 1999. As a note, I wish Mr. Few would move to a new school on the east coast because my alma mater, the University of San Diego, is in the same conference as Gonzaga.
In 2006, I left Morgan Stanley to pursue a job with A.G. Edwards. I went to a satellite office, and it was rat-infested and dimly lit. My office was a storage office, and I had to clean it out myself – not the best way to welcome a new employee, and a few of the brokers were less than cordial when I arrived. It was a horrible career move, and in hindsight, I should have stayed at Morgan Stanley.
When I receive a LinkedIn request, I scan the individuals' employment history, and I'm surprised at how often people change jobs. It's not uncommon to see people change employers every 12 to 18 months. I often wonder why. Is the grass greener somewhere else? Better pay? Office politics? Who knows. It's tempting to change employers, but the new employer is likely similar to the old one after the honeymoon is over. And, a rolling stone gathers no moss.
As we approach the new year, here are a few reasons to stay put.
- Your 401(k) plan can enjoy years of contributions, matches, and compounding. If you contribute the maximum amount to your 401(k) for forty years, you could end up with more than $5 million in assets when you're ready to retire. If you continuously change jobs, your plan will lose the benefit of compounding.
- If your employer offers a pension plan, you can accrue significant benefits over time. A pension plan, coupled with Social Security, will give your retirement a boost. If you leave a company with a pension, you must replace that income stream with personal savings, a difficult task.
- If you work for a publicly-traded company, you may be able to participate in an employee stock purchase plan (ESPP). These plans typically allow you to purchase stock at a 15% discount to the market price, an excellent way to accumulate wealth. If you join a new employer, you might have to wait six months to a year to join their program.
- If you work for a publicly-traded company, and you're highly compensated, you may receive restricted stock or options as part of your compensation. In addition, you might have access to a non-qualified deferred compensation program. These are excellent ways to accumulate wealth. If you change jobs, you can lose these benefits.
- When you stay with one employer, your connections and loyalties run deep. If you regularly change jobs, you will need to forge new relationships, and quality relationships take time to build.
Of course, there are reasons to change jobs, but if you're happy in your current position and it's providing for you and your family, stay put – your older self will thank you for your patience and wisdom.
It does not matter how slowly you go as long as you do not stop. ~ Confucius
December 28, 2020
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM's custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
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