Like many of our clients, Mark works at a Bay Area start up company that compensates employees with stock options, restricted stock units (“RSUs”) and the opportunity to participate in the Employee Stock Purchase Plan (“ESPP”). He and is wife Lee, who are in their 40s, came to First & Main Financial looking to verify they were on the right path to meeting their financial needs throughout retirement. They asked us to help them figure out how much they needed to contribute to retirement funds, how to best fund a new house for their young family, and how to benefit most from their stock options, RSUs and the ESPP.
As we do with all of our clients, we went through a detailed data gathering process. We then analyzed the information and produced a base case scenario, using their current financial situation. We also created multiple “What If” scenarios, such as different retirement ages, various home purchases at different price points, and different approaches to investing their current assets. These “What if” scenarios help assess the overall impact of any changes to their financial plan.
Within each of these scenarios, we projected a “probability of success” of reaching a life expectancy age with enough assets to live on. Most importantly, we showed them the impact of exercising their stock options and RSUs over time, especially in regards to tax liabilities and capital gains treatment. We explained the risks of selling or holding onto their shares. We also suggested that they need to consider their overall goals when thinking about the potential sale of stock, not necessarily how to pay the least amount of tax. Finally, we helped them understand the ESPP program and how to at least benefit from the discount provided to employees such that they could lock in a guaranteed profit.
First & Main Financial provides clients with quality and individual attention as well as complimentary guidance on existing 401(K) money. We also offer our clients a tiered fee schedule for asset management which is considered a good deal compared to the industry averages and starting rates usually charged by other firms.
If you are looking for some financial guidance, whether it’s for a one time financial plan or continuing advice on your investments, we invite you to meet with the First & Main Financial advisors for a free consultation. We work with a variety of clients, including clients like Mark and Lee, who wanted to understand stock options, RSUs and the ESPP. We would be more than happy to sit down with you, assess your current financial situation, and review with you our services to help you navigate your own financial future.