Equity Compensation Plan Participants Value Education

A new poll reveals employers who sponsor equity compensation plans have an important part to play in educating employees.

Eighty-nine percent of those surveyed feel it is important that an employer provide education and guidance about how a stock plan works, according to the poll from Morgan Stanley Global Stock Plan Service. Only 50% feel their employer has done an excellent or very good job of providing such education and guidance.

While 59% of respondents describe their stock plan as a key part of their compensation package, 82% believe having a stock plan is a sound business strategy for employers.

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“Providing first-class educational resources and access to planning tools can help maximize the investment companies make in establishing and maintaining an equity compensation plan,” says Evan Siegal, executive director and head of Product Strategy, Morgan Stanley Corporate Equity Solutions, based in New York.

When asked about financial planning, 66% of respondents were extremely or very confident in reaching long-term financial goals if they had a written financial plan.

“These poll results make it clear that employee education is extremely important to stock plan participants and most expect that education from their employer,” said Walter Veghte executive director and head of Financial Planning Resources at Morgan Stanley. “Financial planning is also directly related to a participants’ confidence about reaching long-term goals and is critical in increasing the value perceived from their stock plans. This poll confirmed that confidence rises when stock plan assets are included in the overall financial plan.”

Optimistic On Growth, Wary Over Competition

Regulatory changes and expectations of increased competition are redefining registered investment adviser (RIA) practices around the U.S.

Changing expectations have not decreased optimism among RIAs, according to the 14th semiannual “Independent Advisor Outlook Study” from Schwab Advisor Services. The majority of RIAs (70%) reached for the study reported feeling “very optimistic” about growth opportunities in the next five years.  

The top two focus areas for independent firms preparing for growth are differentiating in the market (17%) and adopting new technologies (16%).

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When ranking their strongest current competition, 74% of independent advisers pointed to other regional RIAs. Forty-six percent cited competition from wirehouses and 43% said they face competition most strongly from broker/dealers.

A majority (71%) of RIAs believe there will be increased competition for new assets in the next five years. While the number of RIAs believing their strongest competition will come from other RIAs falls to 66% looking beyond 2018, greater competition is expected mostly from the development of national RIAs (51% compared to 34% today) and online investment advisers (45% compared to 12% today).

Close to half of RIAs (44%) expect regulatory changes to make other advisory models look more like independent firms. The same number believes the next generation of clients will seek advice from multiple advisers rather than consolidate assets with one adviser.

Another telling figure: Almost two-thirds of advisers (60%) believe the need to differentiate from the competition is greater than ever.

When it comes to planning future business practices, slightly more than one in three (34%) advisers would dedicate additional technology resources to creating a paperless environment using document management and portal solutions. An additional 27% would migrate key technologies to the cloud to eliminate onsite management.  

Five years out, advisers expect the top investment needs for clients will include providing access to low-cost index funds including mutual funds and ETFs (55%), as well as providing investments with guaranteed minimum income (50%).

The survey also addresses RIAs’ expectations as younger generations of clients enter the retirement planning space. One telling figure in this area shows 77% of advisers strongly agree that adviser independence will be more important in the future to investors than it is today.  

Additional study findings and information on methodology available here.

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