Equity Compensation Recipients Seek Financial Wellness Help

Three-quarters of respondents to a Schwab Stock Plan Services survey consider equity compensation part of their long-term financial plan, and most say their equity compensation helps them feel less stressed about their finances and more prepared for retirement.

Equity compensation can serve many important functions in participants’ overall financial strategies. While employees utilize their benefits in multiple ways, they are most likely to do so to get needed cash (35%), make a large purchase (28%) or help prepare for retirement (11%), according to a survey from Schwab Stock Plan Services.

The average total value of their equity compensation is $72,245, and approximately two-thirds (63%) of employees are fully vested. 

The study also reveals approximately three-quarters (76%) of respondents consider equity compensation part of their long-term financial plan, and most say their equity compensation helps them feel less stressed about their finances (76%) and more prepared for retirement (63%). Boomers (84%) and Gen Xers (81%) are most likely to consider equity compensation as part of their long-term plan, compared to 31% of Millennials who expect to use their equity compensation in the short-term.

But the survey demonstrates that many equity compensation participants could use help in making the most of their benefit. Only half of respondents are confident in their ability to make the right decisions about their plan on their own.

According to the nationwide survey of 1,000 equity compensation plan participants who receive incentive stock options, restricted stock awards and/or participate in employee stock purchase plans (ESPPs), just 24% have exercised employee stock options or sold shares that are part of their equity compensation. Fear of making a mistake is a concern for nearly half (48%). Among those who have never exercised or sold their equity compensation or ESPP, 34% admit to being worried about selling under the wrong market conditions and 34% say they are afraid of potential tax implications of making a wrong decision.

Eighty percent of all respondents say they would be much more confident with the help of a financial adviser. Respondents would like advice on the tax implications of their decisions (50%), using the benefit to help prepare for retirement (44%) and knowing when to exercise or sell their equity awards (35%).

Additionally, survey participants say they would take advantage of a financial wellness program—which would provide education, tools and resources to help with their overall financial health—if it were offered by their employer. Two-thirds of respondents who have access to this benefit take advantage of it, and most participants (96%) find it helpful when making equity compensation decisions. But, only 43% of respondents’ employers currently offer a workplace financial wellness plan.

When considering the components of a financial wellness program they value the most, respondents say they want a holistic plan that goes beyond just equity compensation advice. They are looking for resources to help them with planning for retirement (65%), a free or discounted consultation with a financial adviser (51%), help with personal wealth building (45%) and help with developing savings goals (44%).

“Employers offer equity compensation to reward employees, drive engagement and improve recruiting and retention. The good news for employers is that it’s working. Employees clearly place a high value on these programs, but they are also asking for more help. Delivering that help is the next best step employers can take to further increase the effectiveness of their equity compensation programs,” says Marc McDonough, senior vice president, Schwab Investor Services.


Detailed results can be found here.