In this episode of the Tech Money Podcast, Malcolm Ethridge sits down with Bill Dillhoefer, CEO of Net Worth Strategies Inc, as they discuss the importance of diversification when managing employer stock and options. Bill describes his company’s StockOpter software, and the ways it helps financial planning professionals advise clients who are paid in equity.

Malcolm and Bill dig into the information gap between employers and their employees who are paid in equity and why it exists, the importance of reviewing and understanding your equity grants and plan document(s), what forfeiture value is and why you need to understand it, and how to set a strategy to diversify a concentrated equity position over time.

“Financial advisors are good at telling clients about concentration risk. But you really need to illustrate it. You have to actually show people how concentrated they are, and you need to include some what-if scenarios, so that they can visually see the potential risk. If you just tell them that concentration is risky, it’s not nearly as effective as showing them what happens to their net worth if the stock price goes down.”

Leave a Reply

Your email address will not be published.