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StockOpter® Advisor News Brief |
Welcome to Our Fall Edition
As always, this newsletter is dedicated to helping financial advisors to attract and serve clients with equity compensation planning. We've adopted a new format to make it easier for our readers to view the contents of this publication.
Directory of Equity Compensation Planning Specialists
To help connect individuals who receive equity compensation with financial advisors who specialize in this form of planning, we've developed an online service that is now available. The
Directory of Equity Compensation Planning Specialists allows one to search for advisors by state. The listing currently includes licensed users of
StockOpter® Insight or
StockOpter® Pro that have 'opted-in' to the directory. Basic listings are no charge and contain the user's name, city and state. Detailed contact and practice information is provided for 'Premium' listings.
Click here for details on the costs and terms of being listed in the
directory.
University Study on Perceived Value of Options
A recent research study conducted by professors from the University of Illinois and Michigan State University has found that executives dramatically undervalue (by 50% on average) their employee stock options relative to the Black-Scholes
value of those grants. Of greater importance, the research found that this "cost-value gap" was generally eliminated by providing the personalized education of
StockOpter® Corporate Services. Since companies must now expense options based on Black Scholes or another approved valuation method, the existence of a cost-value gap raises important questions regarding the viability
and effectiveness of stock option programs in fulfilling their stated purpose of motivating and retaining key employees.
Click here for more information on this study.
NWSI to Head Panel on Equity Compensation Education
NWSI CEO Bill Briggs will be moderating a panel of equity compensation education experts at the upcoming annual conference of the National Association of Stock Plan Professionals
(NASPP.org) in Las Vegas (October 10-13). The session entitled, "Getting Your Money's Worth: Enhancing Employee education in a Post-123 World" will feature Bruce Brumberg, founder and Editor-in-Chief of myStockOptions.com, John
Barringer, an advisor with Morgan Stanley specializing in equity compensation (see detailed profile below), and Rusty Field, VP of the Financial Education and Planning Services group at Ameriprise Financial. Net Worth Strategies will also
be exhibiting
StockOpter® Corporate Services at the conference. More information about how this personalized equity compensation education program will help firms to eliminate their "cost-value gaps" can be obtained from the NWSI booth or the
booths of Ameriprise Financial, Fidelity Investments or Merrill Lynch who will also be exhibiting at the conference. |
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Attracting Professionals with Equity Compensation
We talk regularly with financial advisors about the approaches they use for attracting clients with equity compensation to their practices. Consequently, we have good information on what works and what doesn't work for advisors interested
in tapping this lucrative market.
What Doesn't Work:
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Cold calling the Human Resource department. Even if you have an inside connection, this is a long sales cycle that may end with the firm going out to bid for services provided by the major players in the market.
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Doing a single mass mailing to executives identified via online research. Publically available names are generally over-worked and a single mailing usually doesn't generate much attention.
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Mixing the message when engaging prospects. The number one issue for executives is getting the most out of their equity compensation so explaining all the different services one can provide will dilute the impact of your
message.
What Works:
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Asking for referrals. This sounds like a "no brainer" but we hear a lot of reluctance from advisors on this approach. However, advisors who create "
Personal Option Profiles" with StockOpter® Insight for their clients report that asking for referrals is easier because they are simply inquiring whether any of their client's peers would like the same analysis.
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Using a systematic approach to engaging professionals with equity compensation. Advisors who are committed to pursuing this market and have developed a structured framework for doing so report that their efforts pay off
significantly in the long run. These systematic approaches vary from firm to firm but usually include targeted communication streams and ongoing drip marketing.
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Focusing the message on equity compensation. Advisors by nature are jacks of all trades and they are called on to assist clients in a multitude of ways. However, promoting all your different services detracts from the key issue of
an executive. Advisors who are successful at attracting an executive clientele report that they focus their prospecting messages solely on equity compensation and address their other services as the need arises.
Profile of an Equity Compensation Planning Specialist
John P. Barringer is a Vice President and Financial Advisor with Morgan Stanley who specializes in serving executives with equity compensation. John is a Certified Financial Planner (CFP®) Practitioner, and a Rule 144, Retirement & Estate
Planning Specialist; certified by Morgan Stanley. He is the Founder and President of the Rocky Mountain chapter of the National Association of Stock Plan Professionals (NASPP). He is also a member of the National Center for Employee
Ownership (NCEO), the Denver chapter of the Financial Planning Association (FPA) and an advisory board member and contributing author at
myStockOptions.com. For more information or to contact John Barringer, please visit the
Directory of Equity Compensation Planning Specialists.
Planning Tips
Disqualifying Dispositions: A surprisingly large number of advisors have told us that they ALWAYS encourage their clients with ISOs to exercise and hold them for capital gains treatment. Although this is an attractive tax avoidance
strategy when the stock price is increasing, it can be a disaster if the stock price is substantially lower at the end of the year it was exercised. Additionally, telling clients to exercise and hold their ISOs creates an obligation for
the advisor to monitor the stock during the one year holding period and to run a disqualifying disposition analysis prior to year end. Monitoring stock prices and performing a year end analysis will enable you to recommend disqualify the
option (selling the underlying stock) where appropriate to avoid negative AMT tax consequences. For more information on disqualifying dispositions review the articles on
myStockOptions.com
Monitoring a client's ISO grants is a snap with
StockOpter® Insight. Refer to the
User's Guide for how to set triggers and run monitoring reports. Additionally, running a disqualifying disposition analysis is quick work for
StockOpter® Pro. There are two short white papers on our website that explain how to run a disqualifying disposition analysis; one for the
current year and one for disqualifying in the
next year. |
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Upcoming Monthly StockOpter® Webinars
To enroll in any of the following training webinars between now and the end of the year call us at: 877-728-5964. All webinars start at 10am Pacific / 1pm Eastern.
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StockOpter® Insight Training Webinars (1 hour): September 13th, October 18th, November, 15th, and December 13th.
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StockOpter® Pro Training Webinars (2 hours): September 14th, October 19th, November, 16th, and December 14th.
That's all for this edition, let us know if we can be of any assistance to help you build your practice with equity compensation planning. |
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