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Utilizing an advisor to understand when leaving your position would be most profitable

Equity compensation isn’t just essential to evaluate when you’re taking on a new role. Considering your equity compensation is just as important while in your current role or even upon leaving your company.

The example below illustrates how we worked with one client to achieve maximum profits from his stock options. Our team of advisors can help you find a balance between minimizing taxes and extracting value from your equity compensation.

Client Profile:

Equity Compensation: Stock Options

Years with Company: 4+

Industry Type: Highly Volatile

End Result: Vested options at the optimal time to earn profits in the upper six figures.

Deciding to leave a company isn’t always easy—especially when equity compensation is involved. When it comes to generating maximum return on your vested options, timing can be everything. 

And that’s why this particular client knew he needed an experienced financial partner to understand the benefits and risks of leaving his company before his options reached an opportune price.

When the client approached Wealthstream with this decision, his options were trading under their purchase price. In other words, his options were worthless: if the client had left his job immediately, he would earn zero returns on a potentially valuable asset. 

Wealthstream first worked closely with the client to understand their long-term goals. 

At Wealthstream, our clients are more than just numbers on paper. And that’s why our team takes the time to understand what those numbers mean for each client’s current (and future) life needs.

As part of our planning process, Wealthstream watched the market and the company’s stock performance closely. When the stock price went up nearly 40% in one week, it was advised that the client start exercising their options and sell shares in order to take advantage of the potentially short term opportunity.

By working with his advisor to time his exit along with the pricing spike, the client was able to achieve profits in the upper six-figure range. These profits were not only an incredible reward for his time at their organization, but the foundation for a more financially secure future (with Wealthstream’s planning help).

No one can predict the future. But working with an unbiased financial advisor can help you identify whether there’s a benefit to selling or holding a portion of your options. There are also a number of important tax implications to consider that can dramatically impact your profits. Working with an advisor can help you evaluate all your options.

How can you take a strategic approach to your equity compensation plan? Contact our team of equity compensation advisors to learn more about how to determine the best path forward. 

The information provided above is general in nature and is not intended to represent specific investment or professional advice. No client or prospective client should assume that the above information serves as the receipt of, or a substitute for, personalized individual advice from Wealthstream Advisors, which can only be provided through a formal advisory relationship.