How Equity Compensation Fits Into Your Financial Plan

Equity options or awards should be considered a component of your overall compensation. We'll work together to identify your goals and develop a strategy to maximize your wealth. 

Stock options can be complicated, in part because they come in many forms: restricted stock units (RSUs), incentive stock options (ISOs), nonqualified stock options (NQSOs), restricted stock awards (RSAs) and employee stock purchase plans (ESPPs) are common. The tax treatment of your stock options will depend on the type of options you hold, your holding period, and whether you sell at a gain or loss, among other factors.

In developing a financial strategy for your stock options or RSUs, we will work together to review the terms of your equity compensation and the vesting schedule to put in context with your goals. There are tax implications when you sell company stock, and possibly when you exercise them also, so we'll coordinate with your CPA to ensure you have a clear picture of how a course of action may affect your entire financial situation. 

Our team of CFP® professionals can work to help you:

  • Discuss your short and long-term goals to identify how to best utilize stock options in your financial plan
  • Understand your risk tolerance to help ensure that a concentrated stock position is adequately diversified when looking at your complete financial picture
  • Consider how your stock options may fit into your retirement planning strategy 
  • Coordinate with your CPA to understand the projected impact on your tax situation
  • Review your career goals and discuss how vested and unvested stock options may be treated if you leave the company or retire
  • Explore the viability of alternative strategies such as a cashless exercise of stock options
  • Determine whether you're considered an insider at your company and how that may affect your options transaction 

Darrow Wealth Management is a wealth management firm in Boston, MA. Our holistic approach to wealth management allows clients to focus on the important aspects of their life, with the security of knowing their wealth is being managed at the highest level. As a fee-only registered investment advisor with a fiduciary duty, we are only compensated by our clients and do not receive commissions or any other trade-related compensation. Darrow Wealth Management also does not sell securities, insurance, or any other financial products.