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Four Things to Do When Starting a Job with Stock Benefits

The first few weeks at any new job can be a whirlwind. Between onboarding and meeting your new team, things can be hectic, but it’s important to take time to learn about your new benefits and how they may impact your financial goals—and if your company offers stock benefits, it may be helpful to take an even closer look.

There are different stock programs that vary from employer to employer, including: Stock Options, Restricted Stock Units (RSUs), Employee Stock Purchase Plans (ESPPs) and Employee Stock Ownership Plans (ESOPs). Your Human Resource Office (HR) will typically provide a benefits manual that dives into each of their stock offerings, but these tend to be long and tricky to understand—so, what can you do?

Here are four easy steps to get started:

Know the Basics

While full understanding of advanced employer stock programs isn’t necessary to get started, it is advisable to know just the basics and the differences between types:

  • Stock Options: The right to purchase shares of employer stock at a determined price.
  • Restricted Stock Units (RSUs): Shares of employer stock awarded as part of compensation.
  • Employee Stock Purchase Plan (ESPP): Offers discounts of up to 15% on the purchase price of the employer’s stock.
  • Employee Stock Ownership Plan (ESOP): A way for employees to acquire ownership of shares in their employer’s company while participating in potential growth and tax advantages.

Lean on HR

HR is there to help. Don’t hold back from asking questions or sharing your concerns. Often, one can feel uncomfortable asking for assistance but consider that most of your coworkers may be in the same situation. If not offered yet, ask your HR department if they could provide some employee financial wellness workshops focused on the company’s stock plan.

Talk to Your Financial Professional and Accountant

With many employer stock programs requiring knowledge in both tax law and investments to effectively navigate, stock programs can be complicated even for financial professionals. The best way to help your financial professional/accountant is to ensure that they have copies of all your benefits paperwork. There may be a lot of fine print to go over, which the accountant can use to help anticipate your tax filing for the year and your financial professional can use to help manage risk and diversification.

Think About Your Values and Goals

Your employer stock shares fit into your financial big picture; you just need to figure out how. While inattentively acquiring and selling shares of employer stock may work for you, it is not a cohesive plan. It’s important to understand the basics and to collaborate with your financial professional before investing. Otherwise, you may find yourself in a situation where your portfolio is not efficiently managed to meet your goals and is not reflective of your values.

Final Thoughts

Working at a tech or pharma company is as busy as it is exciting; so many of these companies are happy to incentivize employees with stock benefits. Employer stock benefits meet at the crossroads of financial goal planning and tax efficiency: Two subjects many of us aren’t passionate about. But with the trend of employers rolling out financial literacy programs, the future is promising.

In Good Company offers in-office, financial workshops for employers. Looking to bring financial wellness into your workplace? Contact us today.

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