Every industry has its own financial needs. This is true whether you work in the service industry making most of your money off tips or as a surgeon making a lot of money without a W-2. It’s also true for tech professionals. This is an industry in which you can make a lot of money early in your career, often paired with stock options in the startup world. As a tech professional, when you go looking for financial advice it’s important to find someone who can help you manage that profile. For more help finding an advisor, use SmartAsset’s free financial advisor matching service.
Why Look for a Specialized Financial Advisor?
Think of a financial advisor like a doctor. There are general practitioners, and then there are those who specialize in the needs of specific patients. For many people, a generalist advisor is an excellent choice. However, the more money you make and the more specific your financial profile, the more useful a specialist can be.
For financial advisors, specialties can come in many ways. Some advisors have additional training or formal expertise, such as those who work in tax or offshore finance. Sometimes though, you’re simply looking for someone with experience working with clients from a certain industry.
Technology professionals are one category of workers that often do well with an experienced financial advisor. This is a field marked by several specific, if not often unique, financial profiles. This is also a field marked by asymmetry of expertise. As someone who works with math and engineering, it’s easy to see finance as just way of working with numbers, something you’re already good at.
But finance is its own field, with its own issues. Just like a CPA can’t suit up and bang out some code, you can’t necessarily maximize the stock market. By working with a specialist financial advisor you can make the most of your money, whether you want to maximize your wealth or join the FIRE movement.
Technology professionals and engineers in general are marked by high earnings that plateau relatively early. That is to say, you will tend to make a lot more money out the gate than a similarly-situated social sciences major, but your earnings will tend to grow less quickly than theirs.
This creates a front-loaded earnings profile. In your 20’s you will earn a significant portion of your income, which is unusual for many professions. A financial advisor who understands the needs of a technology professional can help you to maximize this earnings profile, building an investment strategy that doesn’t depend on accelerated earnings later in life but rather maximizes substantial earnings earlier.
Repaying Student Loans
Working in technology almost certainly will require higher education. Gone are the days when you could spend a few weeks messing around with Perl and apply for work off that experience. Today you will almost certainly need a bachelor’s degree, if not a master’s, in the field.
But that may well mean significant student loans. Working with the right financial advisor can help you manage and pay off those loans, getting that debt off your back more quickly.
Managing a Volatile Industry
Technology has always been a volatile industry, and today that’s more true than ever.
As a technology professional, you generally have two options for your career. You can manage the technology for companies in unrelated fields, for example running the databases for a retailer, or you can work in technology companies directly, for example coding for an app or software company.
If you work in the technology field directly, you can often expect to hold many different positions at different companies over the course of your career. Technology firms hire and lay workers off routinely, especially as they are often heavily financed by debt and investment. A good advisor can help you prepare for the ups-and-downs that come with this kind of career.
Freelancing and Self-Employment
Due to both the volatile industry and the high value of individual technology professionals, it’s very common for tech workers to strike off on their own.
Skilled coders and engineers frequently work on a freelance or contract basis. Yet the financial profile of this kind of work is very different from that of a W-2 employee. You need to prepare for funding your own health insurance and retirement accounts, as well as the feast and famine nature of self-employment and all of the expenses associated with it. A financial advisor who has experience working with your industry can help you consider all that.
Stock Options and Benefits
Many technology companies, particularly startup firms, include stock options in their compensation. While this is something that firms in any industry can do, it’s particularly common in the technology field. But taking advantage of stock options takes some planning. You need to make sure you keep track of when your options will vest, and compare that to your own personal and professional goals.
Along with high salaries, the technology industry is known for its excellent benefits. This can include many types of retirement and health care plans, as well as more recent options like remote work. Whether it’s as direct as a matching 401(k) or as complicated as the opportunity to move somewhere less expensive, the right financial advisor can review your options to make sure you make the most of your benefit package.
The Bottom Line
Technology professionals have a relatively unusual financial footprint, from their strong early earnings to the common use of stock options in this field. Finding an experienced financial advisor can make all the difference when it comes to making the most of those opportunities.
Tips on Finding Financial Advisors for Tech Professionals
- Have we convinced you to work with a financial advisor? Finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Managing your income can be a tricky process. A good place to start is by figuring out your ideal asset allocation.
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