IMAGE: Andriy Popov /123rf.com
A new survey from Schwab Stock Plan Services reveals that equity compensation accounts for a significant portion of participants’ net worth, with many employees’ portfolios having a concentration in company stock.
According to the nationwide survey conducted in July 2018 of 1,000 stock plan participants who receive employer stock and options, company equity accounts on average for approximately 30 percent of employees’ net worth. Millennial employees have an even greater share of their net worth in equity compensation (42%) than do their Gen X (24%) and Boomer (19%) counterparts. Additionally, 73% of the employees surveyed also own company stock outside of their equity compensation plan, most (44%) in their workplace retirement plans.
Schwab typically recommends having no more than 20 percent of an investment portfolio in company stock, but the results seem to indicate that company stock and option concentration may naturally reduce over time as retirement approaches.
The survey also revealed contradictions between employees saying that they value professional guidance (76%) and where they turn to get equity compensation advice (only 24% interact with an advisor).
This information confirms the need for specific advisor interpreted analytics like StockOpter's '5 Things Employees Need to Know About Their Stock and Options.'
The detailed results of the Schwab survey can be found at: https://www.aboutschwab.com/schwab-stock-plan-services-survey-nov-2018.