Fidelity Launches Equity Compensation Planner

The planner is designed to help employees better understand their stock awards and more easily integrate these stock awards into their overall financial plans.

Fidelity Investments has released a new interactive solution designed to help employees better understand their stock awards and more easily integrate these stock awards into their overall financial plans, dubbed the “Fidelity Equity Compensation Planner.”

As the firm lays out, equity compensation awards can be quite complex and many employees do not always understand the differences between the various types of company stock awards, such as restricted stock, stock options and performance share awards. Employees also may be unsure of how to manage these equity awards within an overall wealth management plan, Fidelity explains, and in addition, employees may not be aware of the tax implications of different award types, which could have a negative impact on the overall value of the awards.

“While employers recognize equity compensation awards are a great way to reward employees and attract and retain top talent, we find many employees don’t fully understand the awards they are receiving,” observes Mark Haggerty, head of Stock Plan Services at Fidelity Investments. “The Fidelity Equity Compensation Planner is designed to help individuals better understand the value of the company stock they receive from an employer, which can help maximize the role of equity compensation within their overall wealth management plan.”

Specifically, the equity compensation solution helps employees understand the different types of company stock awards they currently own, the percentage of each type of stock within their portfolio, as well as suggest various ways an employee can manage company stock alongside other investments. Designed to be used in conjunction with planning sessions with Fidelity representatives, each review session is meant to help individuals with their specific needs and equity holdings.

In addition to providing an overall view of current company stock, the Fidelity Equity Compensation Planner includes modeling capabilities that help employees understand how the value of their equity awards could be impacted based on when shares are scheduled to vest, as well changes to the company’s stock price. This detailed information, when coupled with investment guidance from a Fidelity financial associate, can help employees make the best decisions when it comes to managing their equity compensation awards.

Additional features of the solution include tax liability versus risk assessments. According to Fidelity, understanding tax implications is an important part of managing equity compensation awards. For example, if a stock price falls, an individual could end up losing more in market value than they would have paid in taxes had they exercised their stock grant. The Fidelity Equity Compensation Planner outlines possible tax liabilities and scenarios to help individuals make decisions about managing their equity awards.

“Equity compensation awards can play an important role in achieving financial goals—if individuals understand and manage them effectively,” Haggerty concludes.