What Equity Compensation Participants Want: Schwab Study

The Importance of Financial Advice

Logica Research recently partnered with Charles Schwab on their “2020 Equity Compensation Participant Survey.” Here we round up some of the highlights from publications such as  PLANSPONSOR, ThinkAdvisor, and NAPA-Net.

Financial Stress in Today’s Market

A recent article in ThinkAdvisor covering the Schwab study states that 67% of those who recently exercised or sold equity compensation were influenced by the coronavirus-related market volatility and economic downturn. Amy Reback, vice president of Schwab Stock Plan Services says that: “Without question, 2020 has introduced an unprecedented level of uncertainty, forcing participant investors to reprioritize their long- and short-term financial needs.” Fifty-one percent of participants said they planned to use their equity compensation for retirement. 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, ThinkAdvisor also adds.

Seeking Financial Advice

ThinkAdvisor also shares that 39% of respondents said they were more likely to need financial advice because of the pandemic. The top three areas where employees currently need the most help and advice are retirement planning (32%), investing (28%) and taxes (25%). These are followed by developing a financial plan (22%) and balancing equity compensation with other investments (22%), according to an article on the study in NAPA-Net. ThinkAdvisor also points out that at present, equity compensation makes up 32% of employees’ net worth on average; for millennials, it makes up 43%.

Future of Work Relationships

Eight-five percent of respondents in the Charles Schwab study said they would like their employer to provide more education, according to ThinkAdvisor. More than three-quarters of respondents (77%) say equity compensation is a very attractive benefit, and an increasing number consider it to be the main reason or one of the main reasons they took their current job (37%, up from 28% in 2019). Millennial respondents are the generation that’s most likely to identify equity compensation as the main reason or one of the main reasons they chose their current employer (53%), says PLANSPONSOR. “It’s going to be very interesting to see how the competition for talent impacts employers’ decisions about making equity compensation available to more people than was traditionally the case,” Reback says in PLANSPONSOR’s article.

To find out more, you can read articles by PLANSPONSOR, ThinkAdvisor, and NAPA-Net.

Background: Logica Research conducted the 2020 Equity Compensation Participant Survey on behalf of Schwab Stock Plan Services. The survey took place between July 26 and August 6, 2020. All of the survey respondents worked for companies that offer equity compensation plans, are currently participating in an equity compensation plan, and are between 18-75 years of age.