Overcoming Emotional Attachment To Equity Compensation

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As a financial advisor, you play a complex role in logistically managing your clients' financial goals, lifestyle and retirement. Before this happens, you must build a solid foundation of trust and personal connection – buying into their desires, helping shape their future and caring for the life they are building. No matter how well you have done your job, inevitably, you will have those challenging clients who push back against your advice.

Helping clients understand why one position in their portfolio may be better than another can get tricky when it comes to their company’s stock and equity compensation. The longer your client has worked for the same company, the stronger their attachment. To best help your clients succeed in their financial plan, you need to appeal to the emotions attached to that situation. Only then will clients trust you and your opinion, allowing you to guide them to what’s in their best interest without pushback.

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Helping clients move forward with their financial goals gets tricky when it is time to sell their employer’s stock. Clients may not like the idea of selling. Some are afraid of the separation selling represents; others have a sentimental attachment to the stock; and some may not want to pax the taxes.

The longer your client has worked for the same company, the stronger their sentimental attachment. If they are retiring or changing careers, it may mean shifting away not just from a job, but a way of life – a life that came with stability and security. After many years of dedication, people can develop a deep attachment to their company stock. Selling stock represents a separation from the life they know, and by holding stock, they remain a shareholder, an owner, and most of all, connected.

In addition to retirees and job changers, emotional attachment to one’s company stock applies to current employees – especially those who were able to generate considerable wealth by holding a single stock.