Many Participants With Company Stock Puzzle Over Use

More employers are offering company stock or other forms of equity to workers. The only problem is that more than half aren’t sure how to maximize it for retirement savings, according to a report from Morgan Stanley’s workplace benefits and division.

As companies seek to offer enticing benefit solutions, 76% are providing some form of equity compensation benefits—a 12% jump since 2021, according to research released Monday by Morgan Stanley at Work. Fresh off its workplace benefits event, called Thrive, the firm noted that, despite the rise in equity benefits, many participants aren’t sure of how best to use them.

Among 2.3 million global stock plan participants, 61% said they don’t understand how to maximize the benefit, according to Morgan Stanley. Another 69% said they would likely attend sessions on the topic of equity fundamentals, 67% said they’d be interested to hear about retirement use and 64% would want advanced investing strategies.

There are, however, signs of hope to address this, according to Scott Whatley, head of Morgan Stanley at Work. Surveying also found that 67% of participants would be “likely to attend a session on how to maximize their stock plan benefits for retirement.”

“There is a need for employers to help their employees translate their financial benefits into the real-world context of their individual financial goals, often while juggling competing priorities,” Whatley says. “While there is strong demand for workplace benefits such as equity compensation, there are often knowledge gaps that employers and providers can help address, such as how to utilize this benefit for long-term saving goals or retirement.

Further, he notes, employees ranked access to a financial adviser at the top of their list for most-wanted benefits.

“Given financial advice is often based on a holistic view of their client’s finances, financial advisers can be a great resource to provide guidance on if/how clients should connect their equity compensation benefits to long-term goals,” he says.

Morgan Stanley at Work has recently been working to connect with employees on various aspects of financial planning through the workplace, including to its national network for advisers. The division currently has over 24,000 corporate clients representing about 12 million participants. Its recent Thrive event held in Phoenix, where some of these findings were discussed, had more than 1,000 benefit professionals in areas including health, energy and finance.

Employers may be well-served to improve communication and education by tying equity compensation to other workplace benefits, according to the study. Morgan Stanley found in the survey that 56% of U.S. stock plan participants “said their equity benefits are one reason they have stayed at their company.”

At the moment, 45% of stock plan participants know how to reach someone if they have questions, and 31% said they have a personal financial plan in place, according to the researchers.

“Equity compensation can be complex, and even sophisticated executives may need support from professionals who are knowledgeable in specific areas—whether it’s taxes, 10b5-1 planning, portfolio reallocation, navigating regulations or making sense of unique company plan details,” Whatley says.

He recommends that employers consider a combination of communication methods to reach participants including digital and in-person support, self-guided education, “clear plan communication” and a “smooth” platform user experience.

“The key for companies is balancing the need for scalable benefits solutions with personalization so employees can find the right application in their individual situations,” he says.

Morgan Stanley at Work’s 2023 Annual Stock Plan Participant Survey comes from an in-house survey of 2.3 million active global Morgan Stanley stock plan participants (1.3 million in the U.S. and 980,000 non-U.S. participants) conducted on September 14, 2023, plus one reminder email.