Integrating Financial Wellness Into Equity Compensation Plans

Within the context of equity compensation, financial wellness programs can go a long way to help employees work toward their long-term financial goals.

Over the last few years, financial wellness has become a hot topic in the employee benefits space. A recent survey1 of corporate executives found that more than half have already implemented or are considering implementing a financial wellness program. Forty-four percent even consider it a “must-have” benefit.

It’s fairly common to see financial wellness become a focus in order to increase saving in the retirement plans and enhance overall benefits packages. But, interestingly, one area where it is now starting to gain traction is in the world of equity compensation plans.

Within the context of equity compensation, financial wellness programs can go a long way to help employees work toward their long-term financial goals as well as reduce their financial stress—while helping employers stay competitive and attract and retain the best talent.

Financial Wellness and Equity Compensation: A Great Combination

Equity awards may comprise a significant portion of employees’ wealth, especially if they are young workers who haven’t had time to accumulate assets elsewhere. The guidance offered through financial wellness programs can help these employees manage their overall asset allocation in line with their risk profile, helping them avoid a mismatch between their risk tolerance and a concentration in individual securities.

Some companies with a younger work force may also find that many employees are burdened with student debt. Financial wellness programs can help these workers develop a plan for optimizing their equity awards, to pay down that debt or follow some other long-term financial strategy—rather than using it to cover a short-term expense or one-time purchase.

Likewise, mid-career and older workers may have a different set of financial responsibilities, which could include mortgages, children’s educational expenses and upcoming retirement income needs. Financial wellness programs can help these employees plan how to deploy their awards wisely to help address these obligations and other long-term financial goals.

No matter the makeup of their work force, plan administrators grapple with how to reduce employees’ financial stress—often as it relates to the obligations noted above. Every employee’s financial situation is unique, so financial wellness programs can be very effective when they begin with a personal assessment to gauge financial priorities and stressors, and then outline steps to manage them.

Getting On Board With Financial Wellness

It’s clear that financial wellness offerings can be beneficial to employees. In fact, another study2 found that 82% of employees would take advantage of a financial wellness program if their employer provided one.

Moreover, these programs can be a boon to employers as well. A PwC study showed that financial stress can be a drain on productivity, with nearly half of financially stressed workers spending three or more hours each week thinking about or addressing their personal monetary issues on company time.3 Workplace financial wellness programs that help employees better manage their money can go a long way toward reducing their stress and the productivity drain that accompanies it. These programs also can provide an employer with analytics about its employees’ stress levels and financial concerns, helping it better address the individuals’ needs and track overall progress over time.

Moreover, fostering more engagement among current workers and creating an attractive value proposition for prospective employees can help employers stand out in crowded industries. In fact, not having a financial wellness plan is quickly becoming a competitive disadvantage.

Benefits managers and other corporate decisionmakers know it’s important to invest in offerings that help attract and retain talent if they want their firm to remain competitive, but these don’t have to break the bank. Fortunately, financial wellness can often be layered onto existing benefits without adding significant expense or resource requirements. Equity compensation plan administrators should speak with their benefits providers, including their equity plan providers, about what kinds of financial tools and resources can be integrated into the company’s existing benefit plans.

At the end of the day, a more engaged and less financially stressed work force is good for employees and good for business.

# # #

1The online survey of U.S. and Canadian corporate executives is based on 302 interviews and has a 5.6% margin of error at the 95% confidence rate. Respondents participated in the study between November 4 and December 16, 2016. The survey was conducted for The Charles Schwab Corp. by P&I Content Solutions Group. Statistical analysis was conducted by Signet Research Inc. The white paper detailing the results can be found here.

2Based on an online survey of U.S. workers eligible for a workplace 401(k) plan, half of whom are actively saving in it and half of whom are not, conducted by Koski Research for Schwab Retirement Plan Services, Inc. Koski Research is neither affiliated with, nor employed by, Schwab Retirement Plan Services Inc. The survey is based on 1,000 interviews and has a 3% margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees and were 25 through 70 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services Inc. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between June 2 and 18, this year. Detailed results can be found here. Schwab Retirement Plan Services Inc. is a subsidiary of the Charles Schwab Corp.

3Employee Financial Wellness Survey, 2016 results, PwC, April 2016.

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisers. Its broker/dealer subsidiary, Charles Schwab & Co., Inc. (“Schwab” member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisers; and custodial, operational and trading support for independent, fee-based investment advisers through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at and

Schwab Stock Plan Services provides equity compensation plan services and other financial services to corporations and executives through Charles Schwab & Co., Inc. Charles Schwab & Co., Inc., a registered broker/dealer, offers brokerage and custody services to its customers.



NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice. Statements by the authors do not necessarily reflect the stance of Strategic Insight or its affiliates.