IN THE KNOW
Monthly Newsletter
May 2020
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In this month's newsletter we are sharing helpful COVID-19 resources from our parent company, Maxwell, Locke & Ritter an article about employee stock options and relevant investment articles and videos from Dimensional.
We are a firm that understands that managing your assets is about more than money. It is about empowering your future. At ML&R Wealth Management, we focus on you.
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As the novel coronavirus (COVID-19) continues to spread in the U.S. and across the world, our priority at Maxwell Locke & Ritter is the safety and well-being of our people, clients, families, and community. We are monitoring daily updates and recommendations from the CDC. Additionally, we are minimizing the impact that COVID-19 could have on our services and are staying abreast of all filing deadline adjustments. We understand that in this time of uncertainty you may have growing concerns for the financial health of yourselves and your businesses, employees and families. We have curated some helpful resources for you and will continue to update this page as new information and updates occur.
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Employee stock options (ESOs) are a type of compensation that some employers grant to their employees. ESOs give employees the right to purchase shares of their company stock at an agreed-upon price and future date. ESOs can be a great way for employees to buy an equity stake in their company at a discount. While popular with younger startup companies who may not have the cash to attract and retain the best talent, some bigger companies also offer stock options. ESOs provide an incentive for employees to work harder to ensure company profitability since they now have “skin in the game.” ESOs can also encourage employee longevity. Since the options usually vest over a staggered period of time, employees may have an incentive to stay with the company longer.
There are two types of ESOs: Incentive stock options (ISOs) and non-qualified stock options (NSOs). Each option type is taxed differently.
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Financial Wellness Q&A
In this section we will address common personal finance questions. Email
wealth@mlrpc.com
if you have a question you would like answered.
Question:
What happens to my employee stock options if I leave the company, or if the company is acquired?
Answer:
The answer to this question can depend on several factors, including whether or not the shares had vested, whether your company is public or private, why you are leaving the company, and the specific terms in your options plan. Typically, if the shares are unvested at the time you leave, you will probably lose them. If your shares are vested but you have not exercised them, you may have the opportunity to do so. If you have questions about what would happen to your options after leaving the company, your HR department should be able to provide the clarity you need.
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Dimensional works with a diverse group of leading financial advisors, and we sponsor professional communities where these advisors can gain specialized knowledge and share best practices. We recently asked participants in our Women and Wealth Community to share how they are helping clients during the COVID-19 crisis. These professionals are combining their expertise with empathy to connect with clients and deliver a higher level of financial advice.
Here are a few responses:
Showing clients they can weather the storm
Stuart Smith, Wealth Management Lead Partner, ML&R Wealth Management
The level of anxiety is high for all of us from an emotional, physical, and financial perspective. Clients want to know someone understands their fears and is there to listen and support them—and is also watching their money and making the decisions that they are either unable or scared to make.
For clients who are worried about the market and the volatility, I walk them through the cash they have on hand and how long that will sustain their monthly living needs. Then we look at their fixed income allocation and go through the same process. Once they realize they have support for many years in the future, they tend to relax and understand that they can weather the shorter-term downturn and give their portfolio time to recover.
I try to send weekly emails to let clients know I am here watching over their portfolio. The most rewarding and affirming part of my client communications has been the number of clients who have responded to check on me and my family. That is when you know you are working with the right people.
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Everyone wants to know when we’ll be able to get to the other side of COVID-19. Dimensional Founder David Booth shares what he’s seeing and why it gives him hope.
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University of Chicago economist Kevin Murphy offers an overview of his research into the broad economic impact of the COVID-19 pandemic.
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Crisis brings out the best — and worst — in people. Some dishonest people have already turned the coronavirus (COVID-19) pandemic to their advantage by preying on unsuspecting victims and exploiting their fears.
“History has shown that criminals take every opportunity to perpetrate a fraud on unsuspecting victims, especially when a group of people is vulnerable or in a state of need,” said IRS Criminal Investigation Chief Don Fort.
Here’s an overview of six COVID-19-related scams and practical advice on how to avoid them.
1. Fake Charities
When a catastrophe like COVID-19 strikes, philanthropists flock to donate cash and other assets to help relieve the suffering. But, before making a donation, be aware that opportunistic scammers may set up fake charities to benefit from your generosity.
Fake charities often use names that are similar to legitimate charitable organizations. So, be sure to do your homework before making a contribution. Donors aren’t the only victims to these scams — those in need also lose out.
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Subscribe to our 401(k) Plan Services Quarterly Newsletter
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Are you responsible for administering your company's 401(k) plan?
Would you like more insight and resources regarding the retirement plan services industry?
If so, please subscribe to our 401(k) Plan Services Quarterly Newsletter. You can check out the last few issues below.
See our latest Retirement Plan Services articles:
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What's Happening in Austin This Month
While we know there are no in-person events for the next month, we wanted to share virtual events and activities.
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About ML&R Wealth Management:
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At ML&R Wealth Management, we take investing personally. Your ML&R Wealth Management advisor will work to develop a lasting relationship with you, keeping in touch to understand your changing goals and to provide an asset management strategy to help achieve them. Whenever you need sound financial advice, you have a direct line to a trusted advisor.
For over 20 years, we have served individuals, families, businesses, and nonprofits with wealth management services, custom retirement and 401(k) plans, and portfolio management.
We believe in accountability and transparency and operate as a fee-only advisor with fees calculated solely on assets under management.
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