Fidelity Finds Stock Plan Participants Need Education

The majority of workers with employee stock option, stock purchase, and restricted stock plans have sold shares obtained via their company’s stock plan in the past, but many did so without knowing the tax implications of their actions.

A study from Fidelity Investments found that company stock plans are the number two savings vehicle of choice for many participants, but most (52%) could only “generally” explain it and more than one in ten (11%) said that they could not explain their employee stock plan “at all.” 

The Fidelity Stock Plan Services study, which looked at the behaviors of more than 1,900 stock plan participants at 130 companies nationwide, reveals that the majority or participants (52%) purchased or exercised stock grants in the past and 70% sold shares obtained via their company’s stock plan. About one in four (26%) used the proceeds from a stock sale to pay down credit card debt or other bills, 13% reinvested the proceeds into their retirement plan, and 11% used them for an emergency need.

However, a release about the survey results said many participants surveyed (35%) said they don’t know the tax implications of selling their stock. When looking for support in making these decisions, 10% said they don’t research investment information and another 15% said they make all of their decisions on their own.  

Only 18% said investment advisers are the first place they go for investment information. One-fifth (20%) said they go to brokerage services Web sites and another 13% turn to friends and family (including their spouse).  

“Our research indicates that, although stock plan participants are in many ways financially savvy and save aggressively, there remains a clear need for better education on how stock plan assets can contribute to long-term financial success,” said Joan Bloom, senior vice president in Fidelity’s Stock Plan Services business.