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Survey: Gap Between Equity Comp Aspiration And Action Shows Need For Employee Education And Financial Advice

Knowledge is power. Most importantly, it reduces the fear of the unknown. In the context of stock plans, this is illustrated in the results of an interesting recent national survey of 1,000 stock plan participants by Schwab Stock Plan Services. The survey found that while half understand the long-term value of their equity compensation, many are hesitant about exercising stock options or selling shares because of anxiety that they will make a costly mistake. The survey suggests that improved education and guidance would reduce this fear factor.

The survey revealed that 76% of the participants consider equity compensation to be part of their long-term financial plan. Over a third of the participants (36%) report that stock comp was one of the reasons why they took their current job. Most also said equity compensation helps to keep them at their company, a great example of stock comp's employee-retention value.

Below we present selected results of the survey, including a few graphs from the published survey results.

Most Participants Do Not Act On Equity Comp

Astoundingly, only 24% of the plan participants that Schwab surveyed have actually exercised employee stock options or sold shares acquired from equity comp. Among the rest, 34% admit to being worried about selling in adverse market conditions, and another 34% say they fear the tax consequences of making an uninformed or bad decision. Almost half (48%) are afraid of making a mistake when exercising or selling.

Personal Importance Of Stock Compensation

Many participants view equity compensation as part of their overall financial strategies. These include:

  • getting needed cash (35%)
  • making a big purchase (28%)
  • planning for retirement (11%)

ReasonsMost say their equity compensation helps them feel

  • less stressed about finances (76%)
  • more prepared for retirement (63%)

Boomers (84%) and GenXers (81%) tend to see equity compensation as a long-term deal; by contrast, 31% of Millennials expect to use their stock comp in the short term.

Financial Confidence Is A Major Issue

Nevertheless, only half of the respondents say they are confident in their ability to make the right decisions about their stock comp on their own. Among the majority who have never exercised options or sold shares, the following reasons for their inaction were prevalent:


Confidence levels vary among the major demographic groups:

  • Millennials, 58%
  • GenXers, 44%
  • Boomers, 39%

More Stock Plan Education And Financial Advice Would Improve Equity Comp Outcomes

By revealing this gap between aspiration and action, Schwab's survey suggests that many stock plan participants would benefit both from better stock plan education, to reduce their fear of the unknown, and from seeking the assistance of financial advisors to help them navigate investment and tax details. About 80% of the respondents say they would be much more confident about their stock comp with the help of a financial advisor.

Many participants said they would like advice on:

  • tax consequences (50%)
  • retirement planning (44%)
  • the right timing for exercise/sale decisions (35%)


Stock Plan Education Resources

At, our extensive and engaging educational content on all aspects of equity compensation is licensed by stock plan providers and companies for their plan participants. The content includes not just easy-to-understand articles and FAQs but also videos, podcasts, modeling tools, and fun quizzes on many different topics (for example, try your hand at our quiz on RSUs). When they are ready, participants can seek an advisor with equity comp experience in our AdvisorFind directory.

Register For Our Financial-Planning Conference

We are preparing to hold our first-ever conference, a one-day event: Financial Planning for Public Company Executives & Directors (Monday, June 18, 2018). Taking place in the Boston area, this is a must-attend national conference for financial, tax, and legal advisors working with or wanting to counsel executives, directors, and high-net-worth employees. We have a wonderful group of expert speakers and a comprehensive agenda of sessions on various stock-related and financial-planning topics:

  • trends of importance to advisors
  • tax, estate, and SEC-related planning challenges
  • methods for attracting and advising high-net-worth clients
  • case studies and other examples of successful planning strategies

Continuing education offerings, including CFP® CE credits, will be available. Register at the conference website or contact us for more information (617-734-1979, [email protected]).


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I believe that to give competent advice to holders of equity equity compensation, especially when ESOs are involved, requires advisors to be highly competent in understanding

1) the nature of the granted equity
2) The specifics of the terms of the grants
3) The relevant tax consequences and
4) The risk consequences of holding shares for the long term
5) And the costs and penalties of premature exercises

There are few advisors who are substantially competent in the above areas.

It is also a fact that highly competent management of grants of ESOs and other forms of equity compensation raises the costs to the companies making the grants. The companies therefore do not support efficient management.

John Olagues

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