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October 20, 2020 at 04:42 PM
COVID-19’s long arm has stretched into equity compensation plan participants’ decision making, Schwab Stock Plan Services reported Tuesday.
A survey found that 67% of those who recently exercised or sold equity compensation were influenced by the coronavirus-related market volatility and economic downturn.
Thirty-nine percent of respondents said they were more likely to need financial advice because of the pandemic.
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“Without question, 2020 has introduced an unprecedented level of uncertainty, forcing participant investors to reprioritize their long- and short-term financial needs,” Amy Reback, vice president of Schwab Stock Plan Services, said in a statement.
“These are difficult, confusing decisions within what are arguably the most challenging circumstances in our living history. What has remained the same is the desire to make the best financial decisions possible, and the interest in having access to the tools, advice and guidance needed to make those decisions.”
How Advice Helps
While 51% of participants said they planned to use their equity compensation for retirement, the survey detected a slight uptick overall this year in those turning to their equity compensation to help meet immediate needs — paying off debt (9% versus 5% in 2019); and short-term emergencies (7% versus 5% in 2019).
According to the survey, millennials have experienced a more pronounced effect compared with other generations, and may need more help developing a financial plan.
Ninety-five percent of millennials who recently exercised or sold equity compensation reported that the pandemic had influenced their decision, and 27% said this was because they were under financial stress.
Although more than three-quarters of survey participants reported satisfaction with their employers’ communications about their equity compensation plans during the pandemic, 85% said they would like their employer to provide more education.
