| 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:
- 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.
- 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.
- 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:
- 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.
- 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.
- 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.
- StockOpter Insight© Training Webinars
(1 hour): September 13th, October 18th,
November, 15th, and December 13th.
- 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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