Saving up and Taking Stock for the Younger Generation

Allison is a young dynamo who has been putting her computer-science degree to work as a programmer.  At age 27, she has the opportunity to join a newly public technology company. She’d have the chance to work in a new and creative environment and participate in the Employee Stock Purchase Program (Stock Plan). Independent and yet risk averse, before she changes jobs Allison’s parents suggest that she meet with their financial advisor to discuss a personal financial plan.
Allison has accumulated some savings since high school and has contributed through her employer 401(k) program for the past four years.  She has a small amount of college debt she’d like to pay off. She was planning to purchase a home, but she may apply those funds instead to the new company’s stock purchase plan. She’s needs help making some of these decisions.

At first Allison is skeptical of meeting with her parent’s advisor.  She assumes she will ask her about when and how she plans to retire, which is extremely far off in her mind at this point.  She has accumulated less than $30,000 and realizes that savings should be her first priority. What can a financial planner do for her?

In the first meeting, her planner listens and gathers information about her financial priorities. She makes some recommendations to help her with these decisions, as well as her long-term goals.   During their conversation they together address:

  • What percentage of her income should she put aside?
  • How much should she allocate to paying down college debt?
  • How much to spread among savings, 401(k) and the stock plan?
  • How and where should she move her 401(k) after she leaves the company?
  • When she’s ready to purchase a home, how will credit scores, interest rates, and the loan type will effect down payments as well as monthly payments?

By the end of her first meeting, Allison has a track to run on and the outline for a personal financial plan.  Allison is well on her way to having a plan in place for the next phase of her career.

Mr. Steege is President of SFG Wealth Planning Services, Inc. (SFG), a fee-only financial planning firm. Founded over 20 years ago, SFG is dedicated to assisting senior executives and their employees with their complex stock-based compensation and planning challenges.

*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.

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Executive Compensation, Non-Qualified Deferred Compensation, Performance Stock Units, Restricted Stock Units, Retirement Planning, Stock Options

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