Equity Compensation Planning | TCI Wealth Advisors

At TCI, equity compensation planning is not treated as a standalone service. It is part of the comprehensive financial planning we do for clients because equity compensation is often closely tied to taxes, cash flow, goals, and overall investment strategy.  

Several of our advisors have developed deep experience helping clients navigate equity compensation decisions, working with employees and executives across a wide range of industries, not just technology, who hold RSUs, ISOs, NQSOs, SARs, ESPP shares, or a combination of equity awards. 

Before discussing specific strategies, we start with a simple question: what are you trying to achieve? Are you hoping to reduce concentration in a single stock, buy a home, prepare for retirement, manage taxes, or create more flexibility in your financial life? The answer helps shape the decisions that follow and allows your equity compensation strategy to work alongside the rest of your financial plan. 

A potential mistake is treating equity compensation as a silo. Equity compensation can feel like its own separate category, with its own vesting schedule, tax rules, and emotional weight. People may make decisions about exercising, selling, or holding without connecting those decisions to the rest of their financial picture.  

That may create challenges. Exercising ISOs without understanding the tax impact may trigger an unexpected AMT bill. Holding a large amount of company stock without considering your total net worth can potentially create concentration risk. Planning around a single vesting event without looking at the multi-year picture may lead to decisions that feel right in the moment but do not fully account for future taxes, cash flow needs, or long-term goals.  

Equity compensation is too connected to the rest of your financial life to be planned in isolation. A comprehensive approach considers your equity awards in the context of your full financial plan. 

This is a frequent question we hear from people with equity compensation, and the answer is may be tied to under-withholding.  

When RSUs vest, employers typically withhold taxes at a flat supplemental rate, often 22% federally. For higher earners, that withholding rate may be lower than their actual marginal tax rate. When you add in realized gains from selling vested shares, ESPP disqualifying dispositions, or NQSO exercises, the gap can grow quickly. By April, some people might be surprised by a tax bill they did not fully anticipate.  

As part of the financial planning process, we will help clients identify potential tax considerations, model possible cash flow needs and coordinate with their tax professionals. Advance planning may help clients prepare for potential tax obligations rather than waiting until tax-filing season.  

There is no single strategy that is right for everyone, but there is a thoughtful process. It starts with building a systematic strategy rather than making decisions reactively.  

We look at several factors together: How concentrated is the position relative to your overall net worth? What role does the stock play in funding your goals? What are the tax consequences of selling now versus later? Are you subject to trading windows? Would a 10b5-1 plan be worth considering for scheduled sales?  

From there, we can help build a diversification plan that fits your situation. That may mean selling incrementally over time, coordinating sales with open trading windows, or managing the timing of sales with tax considerations in mind. The goal is not to time the market. It is to reduce concentration risk in a disciplined way that supports your broader financial plan. Any recommendation would depend on your individual circumstances, governing documents, employer policies and applicable securities laws.  

Open trading windows may sometimes be the only time employees can sell company stock, which can make the process feel rushed. When decisions are made quickly, they may not fully account for taxes, cash flow, concentration risk, or long-term goals.  

Planning before an anticipated trading window may provide more time to evaluate potential sales and the consequences of that sale. That means knowing how much you may want to sell, why you are selling, and how that decision fits into your overall financial picture. We work with clients in advance to set targets based on concentration levels, cash flow needs, tax projections, and diversification goals. That way, when the window opens, the decision-making process can be more organized and deliberate.  

For executives and employees with regular vesting or ongoing sales needs, a trading plan intended to satisfy Rule 10b5-1 may also be worth discussing. These plans allow for pre-scheduled sales under certain conditions and may help create more structure around the process.

If your company may go public, it is important to begin planning as early as possible. Beginning the planning process before an S-1 filing or IPO announcement may provide additional time to understand your equity grants, evaluate whether and when to exercise ISOs, build a base of long-term shares, review whether RSUs are single-trigger or double-trigger, and prepare for the possible tax implications of a future liquidity event.  

As an IPO approaches, decisions can come quickly. You may need to think through withholding elections on vesting RSUs, whether to sell shares at or after the IPO, how to prepare for taxes, and how lockup periods or post-IPO trading windows may affect your options.  

At TCI, we view pre-IPO planning as an ongoing conversation, not a one-time decision. The goal is to help you understand your choices, prepare for different outcomes, and integrate your equity compensation into a broader financial plan.