Although the average vested value of U.S. workers’ equity compensation is almost $100,000, less than half of those employees have ever exercised or sold their shares, according to the findings of a new study from Schwab Stock Plan Services.
The study also found that a significant number of those with such compensation plans are using advisors to help them figure out what to do with it all.
The average vested value of U.S. workers’ equity compensation is $97,711 and the average total value of their equity compensation is $149,835, an Equity Compensation Plan Participant Survey of 1,000 employees with such plans that was conducted by Logica Research for Schwab from July 1-16 found.
While 41% of respondents said they exercised or sold at least some of their incentive stock options or restricted stock awards and employee stock purchase plans (ESPPs) during their careers, 59% of them said they never exercised or sold any of their shares.
Among those who never sold or exercised their equity compensation, 38% said they were waiting for more favorable market conditions, while 30% said they were concerned about tax implications and 28% were waiting for their equity compensation to become fully vested, according to Schwab.
Eighteen percent said they weren’t sure how to even exercise or sell their equity compensation, while 14% said they were afraid they would make a mistake by doing so.
Clearly, many employees with such compensation plans see the value of having an advisor — or, according to Schwab, they should at least consider hiring one.
After all, a whopping 82% of respondents said they wanted their employers to offer more education to help them understand equity compensation programs. The specific areas in which they wanted help from their employers included: Planning for retirement (68%), using equity compensation to meet financial goals (55%), developing financial plans (52%) and balancing equity compensation with other investments (51%), Schwab said.
More than half (54%) of respondents were already working with financial advisors, and 78% of that group were getting help from advisors with their equity compensation, according to Schwab. Millennials were the most likely to work with an advisor (60%), followed by boomers (53%) and Gen Xers (47%).