The Equity Compensation Guidebook: Recent Episodes
Daniel Johnson
This podcast is for owners of Equity Compensation positions who want to optimize this wealth so they can do the things they want in retirement and even before. Topics we focus on include everything related to Nonqualified Stock Options, Restricted Stock Units, Restricted Stock, and Employee Stock Purchase Plans. We’ll dive deep into areas such as taxes, retirement planning, investment strategies, college funding, charitable giving and much more. This podcast is designed for long-term employees of publicly traded companies who want a better understanding of their Equity Compensation in episodes of 20 minutes or less.
The focus today is going to be on taxes. You have more control over your taxes than you think. A big portion of my practice is centered around taxes and being tax smart. This does not mean doing anything illegal or even questionable. It simply means taking advantage of opportunities to not tip Uncle Sam and we do this through a variety of ways to reduce taxes. Now, this time of year, I'm asking all my clients to send me their completed tax returns. I don't do taxes, not even my own. However, I get into the returns to make sure everything is in order and more importantly to do planning for the current and even future years, and now is the time to be looking at taxes not waiting until the end of the year.
You will want to hear this episode if you are interested in... * Marginal tax rates [2:20] * Taxation of dividends and bracketology [5:16] * The differences between qualified and ordinary dividends [7:44] * Sun setting of current tax rates [9:52] * Will taxes will be lower now or down the road in retirement [13:54] * This week’s FLASHBACK [15:22]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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We've seen the market give up quite a bit of gains this year. Maybe after the last decade plus of great years we’ve forgotten that the market can go down. Who knows if we will end the year negative, but right now, things are looking good for those accumulating assets. Not so much for those in retirement or nearing retirement. Regardless, I want to spend a few minutes talking about something I deal with a lot...concentration risk. The emphasis in this episode will be ways to reduce your concentration risk for times like these with down markets and extreme volatility.
You will want to hear this episode if you are interested in... * Defining what concentration risk is [1:06] * Stop limit orders [4:07] * Looking at charitable giving [6:21] * Filling up tax brackets [8:02] * ESPP is a quick way to stop accumulation risk [9:27] * Be aware of the big picture [11:19] * This week’s FLASHBACK [13:47]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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In today's episode, I want to talk about a bucket retirement strategy I use with my clients. No, I'm not talking about pickle buckets, which I promise I will explain at the end. We've seen some serious volatility this year in the market. We haven't seen this sort of swing in roughly 15 years. If you're looking too closely at your investments this year, you know we have had volatility all the way through. Most of the cause before was due to inflation and unknowns about the interest rate changes. Things like the invasion of Ukraine certainly have not helped either. Lucily the concept I want to discuss today isn't affected by volatility, at least in the short term. The bucket concept is simple. However, the execution is more complex. Join me to learn more about it.
You will want to hear this episode if you are interested in... * Bucket concept in a nutshell [1:26] * Bucket #1 [2:47] * Bucket #2 [3:03] * Bucket #3 [3:42] * When in retirement will you use each bucket? [5:41] * The pickle bucket story I promised [8:42] * This week’s FLASHBACK [9:42]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
On this week's episode I want to talk about fees. It's a huge issue within my world. More importantly, it's an even even bigger issue in the lives of clients. Fees can take the form of sales commissions, percentage of assets that an advisor manages, hourly fees and more. It's confusing and it's why I operate under a single flat fee structure.
That's right. I charge one flat fee, $8,400 a year, for financial planning and investment services based on my knowledge and experience. I do not charge based on sales products or what the stock market does.
You will want to hear this episode if you are interested in... * Being charged more becuase you have more [0:59] * What a flat fee of $8,400 per year will cost you over time vs and AUM advisor [3:29] * Internal investment expenses [7:16] * This week’s FLASHBACK [10:41]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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On this week's episode, we're going to talk about some important things everyone with equity compensation should be doing, at least in my humble opinion. I've titled the episode, the biggest mistakes to avoid because negative titles get more clicks, however, I don't like the negative approach. The approach I will be taking as I move through these items is to focus on the most important things you should be doing if you have equity compensation and want to be successful with it.
Before we jump into things, I want to remind you that I cater to employees with equity compensation who also work for publicly traded companies. My focus is on RSUs, stock options, restricted stock, and ESPPs. I do not work with startups or things like IPOs. It's not my area of knowledge so if you're looking for an advisor who works in that area, well, I'm simply not that guy. Let's get to it.
You will want to hear this episode if you are interested in... * Show me the money options [1:26] * Take the time to understand your equity compensation [2:29] * ESPPs are my favorite [3:54] * Concentration risk [5:08] * Taking advantage of tax advantages [6:01] * Developing a plan [7:53] * Hiring a pro [8:50] * This week’s FLASHBACK [10:05]
Resources & People Mentioned * Chuckery Trail * The Signal Tree
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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In episode 70 of the Equity Compensation Guidebook, we're going to talk about spending in retirement. Yes, I'm deviating from equity compensation but please stick with me as this is important. Spending in retirement is a huge question everyone wants to know the answer to. Actually, this question can take a variety of forms. Will I have enough to make it through retirement? How much can I spend in retirement? What's my target nest egg so I can actually retire? A few factors include inflation, healthcare expenses, social security, and longevity. Oh, and we certainly can't forget assumptions about what the market may do.
What I want to focus on is what studies show us about spending trends in retirement as this is the most important factor to me. Spending. If you know me, you've heard me focus on your spending number. If you have a good estimate of how much you spend, we can start calculating the rest to answer the question of how much you can spend in retirement.
You will want to hear this episode if you are interested in... * The reverse bell curve of retirement spending [1:45] * Study findings for consumption and spending in retirement [4:10] * Know your spending [7:19] * This week’s FLASHBACK [8:45]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
On this episode, I want to talk about a topic unrelated to equity compensation but something that is impacting more and more of my clients and maybe you too. Identity theft. It's not a fun topic I know but it is one that is critically important. My goal today is to share are a few key tips regarding protecting yourself from getting robbed of your identity and the headache that goes with it. I am no expert in identity theft but I spend a lot of time in this subject area simply because it's another behind-the-scenes service I do for clients as their certified financial planner.
You will want to hear this episode if you are interested in... * A quick look at data breaches from last year [1:06] * Why do breaches happen? [2:25] * Freezing your credit [3:32] * Other tips to help protect yourself from identity theft [5:34] * This week’s FLASHBACK [08:53]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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On this episode of the Equity Compensation Guidebook we're going to talk about one of the most important components of equity compensation. Actually, it's one of the most important parts of any successful investing strategy. Taxes! And what better time to talk about taxes than the season opener for the 2021 filing year! If you know me, you know I have a mantra when it comes to investments and taxes... It's not what you make. It's what you keep. If you end up losing a good portion of your investment returns to taxes every year, you lose the effectiveness of compounding over time. While we do not have complete control over taxes, there are things we can do.
I'm going to start with some of the basics but we're going to stay relatively high level when it comes to the main components of equity compensation. Non-qualified stock options, usually called NSOs or sometimes just stock options. Restricted Stock Units, referred to as RSUs, and then finally Restricted Stock, which sometimes go by Restricted Stock Awards or Restricted Stock Grants. These are the big types of equity compensation and what we will cover today!
You will want to hear this episode if you are interested in... * NSOs and taxes [2:17] * RSUs and Restricted Stock; similar but different [6:31] * The 83B Election [9:38] * This week’s FLASHBACK [11:08]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today's episode is once again going to be a bit off topic from equity compensation. I've been receiving more questions about inflation, markets, interest rates, and those associated items. It seems like now is a good time to tackle all these related topics. Rates are rising and contrary to popular belief that means the economy is doing well. Check out the episode as I explain!
You will want to hear this episode if you are interested in... * Reigning things in a bit [1:23] * How interest rates cool down the market [4:15] * The market will settle once it has a direction [5:15] * This week’s FLASHBACK [8:13]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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It seems to me there is a huge potential in the financial services industry for conflict-of-interest issues, when advisors are allowed to charge clients based on assets under management (AUM). Why is this the case? Because those advisors are then motivated to keep the client’s assets under their control (because that’s what they are paid from) rather than doing what’s truly in the interest of the client. This episode I explain what I’ve decided to do about that potential downside and tell a story or two of how I got to that point.
You will want to hear this episode if you are interested in... * Why a flat-fee arrangement seems best to me [0:21] * My history is a bit outside the norm for my industry [1:18] * The compensation models that are typical, and how they can be problematic [2:45] * A day I’ll never forget that changed my perspective forever [6:38] * How I discovered the flat-fee model that I currently offer [7:55] * One goal I have for 2022: Hiking Half-Dome [9:56]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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The financial industry, of which I’m a part, has many regulations. A handful of them have to do with how advisors are compensated. There are two primary methods of compensation that I’ll fill you in on during this episode. It’s important because the way your advisor is compensated can have a bearing on the type of advice they provide to you. It sounds a bit odd to say it that way, but it’s simply true. Listen to get all the details.
You will want to hear this episode if you are interested in... * A background peek into my world (to help you know what you’re getting into) [0:22] * A final christmas tree story [3:59]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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As the year ends it’s important to consider your Equity Compensation holdings when it comes to the charitable donations you may want to do before the tax year ends. Of course, any time is a good time to make donations to charities, but year-end seems to be opportune because of the tax implications involved. And there are good ways and better ways to make your donations, also based on tax implications. This episode takes a high-level look at the best ways to make your donations and what you should consider in terms of dos and don’ts.
You will want to hear this episode if you are interested in... * The focus on charitable giving using your company stock [0:21] * These comments are based on 2021 rules, so keep that in mind [0:48] * Deductions for charitable giving of company stock [1:11] * The proper steps for donating with “Donor Advised Funds” [5:42] * This week’s FLASHBACK: My second BIG Christmas tree purchase [7:08]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Equity Compensation plans are becoming more and more popular, with job-seekers asking about EC as a possible option for remuneration from their potential employers. Over ¾ of respondents to a recent Charles Schwab survey said Equity Compensation is an essential or important benefit to them because it helps build personal wealth, allows them to participate in the growth of their employer, and they believe that their company’s success will lead to their personal success. But there are also trends relating to how EC recipients are using their compensation and how and why they are selling their positions (when they do). This episode highlights some of the trends we see happening and gives you some insight into what aspects of that data means.
You will want to hear this episode if you are interested in... * Equity compensation wasn’t a focus until after WWII [0:20] * How does EC fit into your investment portfolio [2:50] * This week’s FLASHBACK: A big Christmas tree “Oops!” [5:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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The immediate benefit of a higher salary is a temptation in its own right. We often want things sooner rather than having to wait for them. But what if another compensation route could prove far more lucrative in the long run? How would that change your future, not just your present? This episode of the podcast I want to walk you through the things you should consider as you’re asking and answering the question, “Do I want a higher salary now, or is equity compensation something I could benefit from?”
You will want to hear this episode if you are interested in... * What happens if your employer offers you lower salary but stock options included [0:22] * Equity compensation in general is becoming more common [1:26] * This week’s FLASHBACK [9:32]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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What IS wealth? Does that seem like a strange question for a financially-related podcast host to be asking? Maybe it is, but I think it’s important. A quote I recently read got me thinking about this question in a new way. It’s proved to be very helpful as I analyze my own life and how I help clients think through their future. Are you interested in knowing the answer to the question? Might it be different for you than it is for me? Listen and let’s learn together.
You will want to hear this episode if you are interested in... * Why I’m addressing a work-life-balance topic [0:22] * Is having lots of money a contributor to happiness? [2:40] * Social wealth: Is it simply about followers and retweets, or is it something more? [3:14] * The role physical health plays in personal wealth over the long haul [4:58] * How wealth-seeking may require trade offs, so make sure they are worth it [6:06] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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There are many things to consider when it comes to retiring with non qualified stock options… your spending number, your net worth, the status of your stock options, how much is in tax-deferred accounts, current tax rates, other income sources like social security, etc. If you work through all those things, you can work out a plan to sell off company stock, reduce your concentration risk, and by doing so, not pay too much in taxes. This episode highlights some of the issues to consider, and I’m happy for you to reach out to me to think it through from an experienced perspective.
You will want to hear this episode if you are interested in... * Why I’m breaking down this complicated issue into more than one episode [0:32] * DISCLAIMER: This is NOT an options episode, the focus is Equity Compensation [1:56] * First: figure out what you spend, then you can project retirement numbers [2:30] * Get the numbers needed to calculate your entire net worth [4:32] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today we are getting back to business and in this episode, we are back to one of several episodes that I have been doing that focus on retiring with equity compensation. There's too much to cover in one episode, especially since mine is pretty short. Blame the GenX lack of attention span I guess. In reality, I just wanted to break these up so you can pick and choose which to listen to since it’s unlikely that all will apply to each of you.
We'll talk about employee stock purchase plans today, but I'll just call it ESPP. I know there are others but we will stick with non-qualified stock options, restricted stock awards, restricted stock units, and employee stock purchase plans for these episodes. Most of you will have some combination of these types of equity compensation. DISCLAIMER: These may sound slightly repetitive if you’ve listened to them back to back as there is some overlap between each type of equity compensation.
You will want to hear this episode if you are interested in... * The things to do first [1:59] * What form does your ESPP take? [6:24] * Nonqualified ESPPs [6:44] * Qualified ESPPs [7:20] * Disqualifying dispositions [11:47] * Pulling it all together [14:41] * This week’s FLASHBACK [16:09]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today's episode is another break from equity compensation and as an added bonus, it will also be a short episode. I'm going to spend a couple of minutes talking about a few popular investment strategies that I recently read about in an article.
I get asked on a regular basis what the best investment strategy is and the short answer is...one you will stick to. While that sounds trite, it is true. I've had clients over the years who constantly shifted their investment strategies based on a variety of reasons like news coverage, gut feelings, and conversations with family or friends were the most popular. It’s hard to make progress toward any goal when things keep shifting. So pick a strategy and stick with it.
You will want to hear this episode if you are interested in... * What is the “Dog” strategy? [1:35] * What is the “Best” strategy? [1:51] * What is the “Balanced” strategy? [2:15] * Dog strategy findings [3:15] * Best strategy findings [4:08] * Balanced strategy findings [2:15] * This week’s FLASHBACK [6:01]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today we are taking a break from equity compensation. If you listen to the Equity Compensation Guidebook podcast regularly, you may be happy about getting off-topic!. In this episode, I'll spend a few minutes talking about Social Security. You may be thinking that Social Security is a complex topic so how in the world can I only spend a few minutes talking about it? Well, I just want to focus on the annual report from the Social Security trustees and what I see every year as a result of that report. For my own disclaimer, and even though I have lots of gray hair, I am decades away from Social Security.
You will want to hear this episode if you are interested in... * Scary headlines from this year’s Social Security annual report [1:18] * Taking Social Security early hurts beneficiaries [2:50] * Will Congress and the President allow Social Security to go insolvent? [5:47] * This week’s FLASHBACK [7:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today's episode is the second of several episodes that I will be doing that focus on retiring with equity compensation. There's too much to cover in one episode, especially since mine are pretty short. Blame the GenX lack of attention span I guess. Really I just wanted to break these up so you can pick and choose which to listen to since it’s unlikely that all will apply to each of you.
We'll talk about restricted stock awards today, but I'll just call it restricted stock. I know there are others but we will stick with non-qualified stock options, restricted stock awards, restricted stock units, and employee stock purchase plans for these episodes. Most of you will have some combination of these types of equity compensation. DISCLAIMER: If you listened to the last episode on retiring with restricted stock units, better known as RSUs, a lot of this will sound very familiar. Honestly, most parts are the same, except when it comes to taxation, dividends, and voting rights.
You will want to hear this episode if you are interested in... * Do you know your spending number? [2:37] * Do you know your net worth [4:46] * Let’s talk about restricted stock awards! [5:56] * Concentration risk and taxes [6:42] * What sets restricted stock apart [9:16] * Tracking various cost basis [11:09] * 83b election option [13:13] * This week’s FLASHBACK [16:24]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today's episode is one of several that I will be doing that focuses on retirement with equity compensation. In my opinion, there is too much to cover in one episode, especially considering my episodes are short. You know, GenX, lack of attention span and all that. Honestly, it's just that I want to break these out because some topics may apply to just a few people and some will apply to more of you. I know there are others but we will stick with non-qualified stock options, restricted stock awards, restricted stock units, and employee stock purchase plans for these episodes. Most of you will have some combination of these types of equity compensation. One last thing, these may become a bit repetitive if you listen to each and every one. There are key items that I'll mention in every episode because I expect listeners will pick and choose which episodes to listen to and I want to be sure to cover the critical terms in each episode so they don't get missed.
You will want to hear this episode if you are interested in... * Projecting rough retirement numbers [1:57] * Gather number for your entire net worth [3:58] * After your prep work is done [5:07] * Identifying and tracking various cost basis [9:51] * Projecting big planned future expenses [11:12] * Pulling it all together [12:04] * This week’s FLASHBACK [13:40]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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In today's episode, I'm going to spend a little time comparing restricted stock and restricted stock units. I know I've talked about them separately. However, I thought it was important to spend a few minutes discussing them in one episode. This isn't really a compare and contrast like we had to do a million years ago in grade school and high school. However, I want to be sure to hit the highlights for both. Both good and bad items.
Before we start just a little bit of housekeeping as always. When I say restricted stock, I'm referring to restricted stock awards, or sometimes they're referred to as restricted stock grants, just to keep things simple, I'm going to call them restricted stock. Also, restricted stock units don't have any other names they're known by except for their abbreviation of RSUs. I'll most likely refer to restricted stock units as RSUs. Let's now get to it.
You will want to hear this episode if you are interested in... * A little housekeeping before we start [0:53] * What are restricted stock and restricted stock units? [1:27] * Vesting requirements [2:27] * Taxes make all the difference [3:14] * Restricted stock is a slightly different animal [6:55] * Unique aspects of restricted stock [10:23] * This week’s FLASHBACK [13:44]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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This episode, I decided to take a break from our normal Equity Compensation topics to cover something that’s happened in the U.S. that we all need to at least be aware of. What is it? The proposed tax changes we’ve all expected are finally unveiled and there are some stunners in the mix. The reasons behind these dramatic changes will become more clear in the weeks to come In this episode, I go through the basics on a high level and venture a few opinions as well. In the end, if you feel these changes are relevant to you, seek advice from your CPA or Tax Attorney.
You will want to hear this episode if you are interested in... * Highlights of the potential dramatic changes coming because of The American Families plan [0:23] * Single and Married, filing jointly, with incomes below $400,000/$450,000 [1:50] * Things NOT in this version of the bill that were expected [8:45] * Flashback: When I first learned about interest rates [11:17]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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When you’re offered an Equity Compensation package, how do you decide which options are better for your situation? It’s not easy to wade through the differences, so I recorded this episode to help you understand them. In this episode you’ll learn the positives and negatives of both stock options and restricted stock. You might also learn how you can select both options — if your employer allows you to choose both. Listen to get the details.
You will want to hear this episode if you are interested in... * The current trends in Equity Compensation [1:26] * Why the current changes are not all that bad [4:46] * The positives and negatives, broken down [5:08] * So which is better? [11:17] * FLASHBACK: My time in the “speech trailer” [12:40]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today a reboot of one of the first episodes I did. Way back before I focused on equity compensation—and the audio was pretty bad too—so I decided to update it. This episode is an introduction to equity compensation and we're going to cover some of the basics in a 30,000 foot view. This is probably one of the more important episodes I've done as it provides the foundation so you can better understand your equity compensation. The more you understand it, the better the odds are that you will then make better decisions around your equity compensation. Additionally, when nearly 90% of employees say their employers need to provide more educational resources regarding equity compensation this leads me to believe most owners of equity compensation want to learn more. That’s where this podcast can help you out.
You will want to hear this episode if you are interested in... * A breakdown of what equity compensation is [1:35] * Do you have questions? [4:56] * Vocab recap list [5:40] * This week’s FLASHBACK [14:03]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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Today's episode of the Equity Compensation Guidebook is about what happens to your equity compensation if your company is bought out, merges, is acquired, or whatever it may be. I have had a few people ask about the topic specifically, so this one's for you! I will also touch briefly on what happens to if the company goes completely under, but that's a short depressing explanation so we won't start there. As always it’s short and to the point so have a listen!
You will want to hear this episode if you are interested in... * What happens with non-qualified stock options? [1:08] * What happens with restricted stock units? [5:04] * What happens if your company goes under? [9:54] * This week’s FLASHBACK [11:13]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
This episode is based on a LinkedIn post I saw recently from an owner of the Savannah Bananas. If you're not familiar, they are a baseball team in Savannah, Georgia. A husband and wife bought the team a handful of years ago, and they were basically broke. They focused on a different experience for fans, which quickly resonated and turned things around dramatically.
The Bananas play in a former minor league baseball stadium that seats around 4,000 people. Every game is sold out and they have a 6,000 person waiting list for season tickets. This is a team that is made up of college players. It is not a minor league affiliate or tied to a professional team. And it's all in a town with a population of roughly 140,000 people.
The post caught my attention because Jesse, an owner, mentioned things they don't have. Items like electric scoreboards, ads all across the outfield, $6 hot dogs, and $5 water bottles. It was just him talking about how they are different and I can relate to being different. I don't know any other purely flat fee CFPs in Ohio besides me and that makes my practice rather unique so I thought it would share how I, like the Bananas, provide a different experience.
You will want to hear this episode if you are interested in... * The Savannah Bananas [0:33] * The things I’m not [2:33] * This week’s FLASHBACK [7:25]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode, we're going to cover a topic that assumes you are newly receiving equity compensation awards. Specifically, restricted stock units (RSUs). First off, congratulations! Seriously. Equity compensation is highly valued by participants who receive it and hopefully, it will help you build wealth for your future.
There are some key things to do now that you will be receiving RSUs. I will be touching on a variety of things for you to ask and do. The list will not be comprehensive and everything may not apply to you. However, these are some of the most common items I see with my equity compensation clients. Also, I'll be going through them at a high level. Don't worry. I'll be sure to cover them in greater detail in future episodes. Heck, some of them have already been covered. If you know nothing about restricted stock units check out episode 18. This breaks down what a restricted stock unit is.
You will want to hear this episode if you are interested in... * What to ask when you are told you will be getting your RSUs [2:14] * Where the rubber meets the road [6:36] * Do you want to hold on to all of the shares? [8:41] * This week’s FLASHBACK [11:56]
Resources & People Mentioned * Equity Compensation Taxes 101, Episode 15 * What is a Restricted Stock Unit? Episode 18 * What To Do When RSUs Vest, Episode 41
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In this week's episode, I want to cover why equity compensation is so valued by employees. Although we're staying general, I'll still be touching on some specific reasons. If you've listened to previous episodes, you know I like to give a little background info? Well, this will be no different. I will do my best to keep it short and sweet. Remember, when I'm talking about equity compensation, I'm referring to company stock that is awarded and or made available to you through your employer. I focus on publicly traded companies but this can also apply to privately held companies as well. Your equity compensation positions may be acquired through employee stock purchase plans, restricted stock units, restricted stock awards (aka restricted stock), and last but not least non-qualified stock options. To keep it simple I'm just lumping them all together as equity compensation. With that background, let's get to it.
You will want to hear this episode if you are interested in... * Top 3 reasons employees value equity compensation according to a 2017 study [1:47] * Changes in what people are doing with equity compensation [4:53] * How equity compensation is used for bringing on and keeping talent [6:20] * What do 85% of people want more of in regards to equity compensation? [8:09] * This week’s FLASHBACK [09:54]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode, I'll go into a bit more detail on one of the more popular podcasts I have recorded to date. The topic is concentration risk. I've already covered what concentrated risk is in a previous episode so we will talk about some specific strategies to reduce your risk.
Concentration risk tends to happen slowly over time. It’s the amount of risk you take by investing in one—or a couple of similar positions. I'm not going to go into a more complex definition of concentration risk as honestly, I don't think anyone cares. Instead, I'm going to ask you my favorite concentrated risk-related question. If you were not a current employee of this company, how much of their stock would you own in your own portfolio?
You will want to hear this episode if you are interested in... * What is concentration risk? [0:46] * How much of their stock would you own if you didn’t work there? [1:16] * Looking at the forest [4:14] * Looking at the trees [5:55] * The percentage of holdings in your one concentrated position [8:44] * Rebalancing [9:39] * This week’s FLASHBACK [11:51]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In this episode, we are going to deal with one simple question. If your company offers you non-qualified stock options, should you accept them? The answer...YES! A big fat resounding, yes! Now if I stop here, this will be the shortest episode I've ever done. Honestly, you could stop here, but I need to provide some data to back this position up. Some of this will be a repeat from other episodes, but it is too important not to cover.
You will want to hear this episode if you are interested in... * Participating in your company’s success [2:04] * No taxes if you don’t exercise [3:23] * Time periods to remember [4:53] * Paying for options [6:23] * No risk, all reward [9:26] * This week’s FLASHBACK [13:08]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode, I'm once again going off-topic from equity compensation. It’s my podcast… I’ll do what I want 😂. I thought I would hit on a topic I'm aware of from seeing it with my own clients and clients of other advisors I know. The short version is I want to share some thoughts on some of the biggest retirement mistakes I've seen in my years. This will not be things like not starting your savings early enough or choosing the wrong social security start date. Nope. These are mostly more qualitative mistakes and something I've learned from watching my clients and talking to other advisors is to make sure your retirement is your own!
You will want to hear this episode if you are interested in... * Retirement doesn’t mean your brain can take off for the rest of your life! [1:12] * Retirement doesn’t mean your life revolves around your kids or grandkids! [3:16] * You don’t—and shouldn’t—wait for retirement to START enjoying your life! [5:28] * Retirement on YOUR terms [7:46] * This week’s FLASHBACK [10:26]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In the last episode, the focus was on restricted stock and restricted stock units. The focus in this episode is on non-qualified stock options. Part of the reason I feel this topic is so important is that it deals with specific strategies you can use to help you optimize your non-qualified stock options. Personally, I love NSOs because there is no risk to you until you exercise the option. I won't go too far into the weeds as you can go back to episode 20 where I get into the nitty-gritty details. There is no risk because you do not own the NSOs until the point you exercise them so no taxes until then either. If the actual stock price is lower than the strike price at the time you are to exercise the option, you simply do not exercise them as it would be cheaper for you to buy them on the open stock market. Today I'll cover three specific strategies to exercise your NSOs but the best strategy is the one personalized to your individual situation. So be sure to talk to your CFP to make the best decision for you.
You will want to hear this episode if you are interested in... * The time-based strategy [2:51] * Price based strategy [5:13] * Tax based strategy [6:21] * This week’s FLASHBACK [9:20]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today's episode is a topic of great interest, at least in my experience. We're going to talk about some specific strategies to get out of company stock. We'll focus primarily on restricted stock and RSUs. However, you certainly could use these strategies for non-qualified stock options as well.
Before we jump into it, I want to share why having a disciplined strategy to sell company stock is so important. One reason is it helps reduce concentration risk. Some other reasons come from a study by Charles Schwab on why participants never sold their equity compensation positions. The two main reasons were fear of tax implications and that people were worried about selling under the wrong market conditions. Another reason, people simply did not know how to sell these positions. Having a disciplined strategy helps to mitigate these issues.
There are four specific strategies that we're going to cover. These are not in any order of importance and my position is that the most important one is the one applicable to your personal situation and not some general rule developed by someone who does not know your circumstances.
You will want to hear this episode if you are interested in... * Why having a strategy to sell company stock is important [1:27] * First strategy: Set price target [2:35] * Second strategy: Price triggers [3:43] * Third strategy: Systematic selling [4:38] * Fourth strategy: Tax management [5:33] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
We're back on the equity compensation train here. I know I've deviated a bit recently with other topics. However, I felt those were important enough to cover. Plus it's important to mix things up every so often. The topic of this episode is what the heck should you do with your RSUs once they vest? Sell, hold, a bit of both? We'll cover some of these items that you need to consider. As a reminder, RSU stands for restricted stock units and may be the simplest form of equity compensation.
You will want to hear this episode if you are interested in... * Why RSUs may be the simplest form of equity compensation [1:07] * Dumping your RSUs [3:47] * Holding shares once they are in your control [6:46] * The Goldilocks approach [9:04] * This week’s FLASHBACK [10:28]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Once again I’m breaking off from the world of equity compensation in this podcast episode. Instead, I thought I would take a step back and share some quick thoughts of what I've noticed in a post COVID world. These are just a few items related to personal finance. The observations come mostly from conversations with clients and prospective clients. This episode was initially a quick article I sent out through my weekly email list. If you want to sign up for it, just visit my website at forwardthinkingwm.com. If you go to the insight section, you'll see a box where you can sign up.
You will want to hear this episode if you are interested in... * Making life simpler [1:30] * Working differently and being as productive as before, maybe more so [3:10] * Not wanting to go back to the way things were [4:28] * Customized retirement styles [5:18] * This week’s FLASHBACK [7:29]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today we're going to talk about one of my favorite expressions 'It's not what you make. It's what you keep.' I'm going to borrow from a tremendous blog post that Michael Kitces wrote some time ago. If you're not familiar with Michael he's one of the big thinkers in my world of financial planning. He puts out a ton of wonderful material. If you want to nerd out, you have to check out his blog. The title of the blog post I want to dissect is 'The Hierarchy of Tax Preferenced Savings Vehicles for High-Income Earners', not sure about the grammatical correctness but it’s a fantastic article. My financial planning and investment management firm caters to equity compensation owners who are typically high-income earners so Michael's article makes me feel like I am in good company since we both prioritize tax savings for high-income earners in the same way.
You will want to hear this episode if you are interested in... * The two categories of tax preference accounts [1:51] * The HSA [2:33] * Tax preferred vehicles that have doubled tax-preferred components [5:59] * The Backdoor Roth [8:27] * The Mega Backdoor Roth [11:05] * Tax-efficient investing [12:48] * This week’s FLASHBACK [14:41]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
This week's episode of the Equity Compensation Guidebook is going to be super short. We're going to continue the conversation about taxation of employee stock purchase plans. I could try to make this episode much longer by reviewing what exactly is an ESPP. However, I'm not that guy, just go back and listen to the previous episode #37. That episode covers the basics of employee stock purchase plans as well as the introduction of taxes and disqualifying dispositions (still one of my favorite terms). There are two main items to know with taxation of ESPPs and we will cover them both in this episode so check it out.
You will want to hear this episode if you are interested in... * What to know if you have a non-qualified ESPP [1:07] * What to know if your ESPP is a qualified plan [1:41] * This week’s FLASHBACK [6:02]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today we're going to talk in a bit more detail about the taxation of ESPps, better known as employee stock purchase plans. I've mentioned before that ESPs are my favorite form of equity compensation. This is for a few reasons, but before I jump into the reasons, just a quick reminder of what an ESPP is. In its simplest form: employee stock purchase plans allow employees to purchase company stock through payroll deductions. I did an early podcast episode focusing just on ESPPs. I think it's episode 7. You may want to go back and listen to that episode for general details on employee stock purchase plans but please overlook any audio issues. It was an early episode and some of those sound a bit echoey.
You will want to hear this episode if you are interested in... * How do I love thee? Let me count the ways [0:58] * Holding periods for ESPPs [4:50] * Long and short term capital gains [7:37] * This week’s FLASHBACK [8:58]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today we're going to go completely off topic from equity compensation. The bonus is it will be super short. We’ve lived in our home for four years! We still get junk mail from the retirees we bought it from. A common piece of mail is the invitation to a dinner seminar.
Now, I’ve never attended one because I’m not the one being invited but mainly because the fine print says something along the lines of if a financial advisor, attorney, or even a CPA attends the host will charge them an educational fee that's usually in the range of a couple thousand dollars. No thank you! But let’s chat about all the things I’ve learned just from reading these fancy meal mailers!
You will want to hear this episode if you are interested in... * What you get in retired people’s mail [0:56] * Did you know there are new rules to investing? [1:49] * “Crash proofing” your assets and retirement [2:21] * This is not a sales pitch! [5:27] * This week’s FLASHBACK [8:30]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today on Equity Compensation Guidebook we're going to talk about another tax-smart investing concept, direct indexing. Direct indexing is building out an investment portfolio to track the performance of a specific index. However, you do it through buying individual positions instead of buying an exchange-traded fund (ETF) or a mutual fund.
The concept of direct indexing has been around for years and it provides many benefits which we'll cover in this episode. Up until now, it hasn't been available to the masses as it was expensive to administer. The investment companies that provided direct indexing had to set high minimums which put it out of reach for many investors. Fortunately, technology has advanced enough to provide more access to the continuously increasing interest in direct indexing.
You will want to hear this episode if you are interested in... * The concept of direct indexing [1:27] * Picking on mutual funds [3:26] * Taking out the middleman with ETFs [4:44] * How direct indexing can help you be even more tax-smarter than ETFs [6:49] * Flexibility that puts you in control of the companies you invest in [9:26] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to the second part of the tax-smart investing mini-series. I feel like I'm cheating you by calling this a mini-series since it's just two parts. However, I'm a child of the '80s and mini-series is just so much cooler to say! A couple of key points from last week… It’s not what you make, it's what you keep. Meaning, what you make is only counted after the taxes you pay. Don’t tip Uncle Sam! Don’t break the law but make sure you are getting as close to the line as possible so Sam gets his and you keep yours! In the last episode, we covered 7 specific strategies to be a tax-smart investor, so check that out if you missed it.
Today we’re going to talk about 5 specific tax-smart planning ideas for 2021. These ideas come directly from SEI and their tax planning team. So without further ado let jump into them. As a reminder, be sure to consult your tax advisor before implementing any of these ideas.
You will want to hear this episode if you are interested in... * The Roth conversion [3:24] * Accelerating income tax deductions [4:48] * Lower cost basis strategy [6:13] * Moving future income into the current year [7:24] * Limiting 401k deductions [8:03] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to another mini-series. I'm going to go a bit off-topic from equity compensation with this one. I think we deserve a break after the 4 part series on net unrealized appreciation. I'm going to spend the next two episodes talking about tax-smart investing.
I have a couple of mantras that you may have heard me say before but these are specific to taxes. First... it's not what you make, it's what you keep. Meaning I want to know what your returns are after taxes. More importantly, it extends to making sure you’re taking advantage of all of the IRS approved tax-saving strategies that are available to you. Why? Well, the other mantra is don’t tip Uncle Sam. There is no reason to pay more in taxes than necessary. Just to be clear, I would never recommend anything illegal or even unethical. The IRS provides a lot of strategies for saving taxes, but it's up to you to take advantage of them. Let go find out how!
You will want to hear this episode if you are interested in... * Using a 3rd party money manager [1:44] * Tax smart strategy #1 - Tax Loss Harvesting [3:08] * Tax smart strategy #2 - Proper design of portfolios [3:50] * Tax smart strategy #3 - Tax lot investments [4:15] * Tax smart strategy #4 - Withdrawal and rebalancing [5:00] * Tax smart strategy #5 - Managing holding periods [5:27] * Tax smart strategy #6 - Portfolio transition management [6:00] * Tax smart strategy #7 - Gifting [6:34] * This week’s FLASHBACK [7:44]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to Part 4 of the Equity Compensation Guidebook NUA mini-series. This is actually the final part. There are previous segments that you may want to listen to. However, as always, you're more than welcome to jump in right here. Thus far we've covered distributions for NUA, we dug into when it makes sense to do NUA, and everyone's favorite...taxes. As a reminder, NUA stands for Net Unrealized Appreciation.
It's an advanced planning and financial planning technique for people who own company stock within tax-deferred workplace retirement plans. The key here is the stock has appreciated since they acquired it. NUA is a way to potentially save significant amounts in taxes. Now that we've covered a lot of the details in previous episodes I believe it's time to dig a bit more into qualifying events and some key rules with NUA. This is important because not just anyone can decide one day that they want to do Net Unrealized Appreciation, you have to qualify and today we will find out if you do!
I hope you’ve learned something useful throughout this mini-series. Please share it. You never know who you know that needs to know what you just learned!
You will want to hear this episode if you are interested in... * Do you qualify for NUA? [2:04] * Specific criteria you need to meet to be kosher with net unrealized appreciation [3:49] * A few final rules and thoughts [6:36] * This week’s FLASHBACK [11:08]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to part three of the NUA mini-series. There are two previous segments you may want to listen to, or you can jump in right here. So far in previous episodes, we've covered distribution options for NUA and when it does and does not make sense to do an NUA. As a reminder, NUA stands for Net Unrealized Appreciation. This is an advanced financial planning technique for people who own company stock within tax-deferred workplace retirement plans. The key here is that the stock has appreciated since acquiring it. NUA is a way to potentially save significant amounts in taxes and I’m going to tell you how in this episode.
You will want to hear this episode if you are interested in... * Tax basics for Net Unrealized Appreciation [1:49] * A few rules to know about the NUA [5:23] * The difference between public and private stock [7:50] * This week’s FLASHBACK [9:12]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to Part 2 of the NUA (net unrealized appreciation) mini-series. If this is the first episode in the series that you're listening to it may be worth it to go back and have a quick listen to the last episode just to get a little background. However, you're more than welcome to jump in right here.
I promised in the last episode to spend some time talking about when it makes sense to use net realized appreciation. I can't stress this enough NUA is an advanced financial planning technique. It is designed for people with company stock in a tax-deferred employer retirement plan. But, just because you fall into this category does not mean you should use an NUA. Listen to this episode of the Equity Compensation Guidebook to learn more about whether it’s right for you.
You will want to hear this episode if you are interested in... * When it may NOT make sense for you to us NUA [1:12] * When it DOES make sense to use the NUA [2:42] * Is the gap between ordinary income and capital gains rates enough? [4:49] * The time frame until you have a qualifying event [6:56] * This week’s FLASHBACK [8:09]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today's episode of the Equity Compensation Guidebook is the start of another mini-series. I did one before and the responses were positive so I thought I would do another. Plus, this is a great way for me to dive deeper into an equity compensation-related topic. These can be complex topics and my choices are to do a long episode or break the topic into manageable parts. My philosophy is to keep these episodes well under 30 minutes. Why? As a child of the '80s, I learned everything can be solved in a 30min sitcom episode. I figure that applies to podcasts too, right? I covered the generalities of what net unrealized appreciation or NUA is in episode 28 so if you haven’t already, go check that one out! And if you have, thanks!
You will want to hear this episode if you are interested in... * Don’t be an NUA guinea pig [1:30] * The rollover Individual Retirement Account [2:55] * The lump-sum [4:08] * When to consider an NUA [5:33] * Saving big when you utilize an NUA [6:14] * This week’s FLASHBACK [8:51]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode of the Equity Compensation Guidebook, I'm following up on a planning topic I mentioned a couple of episodes ago. Net Unrealized Appreciation, better known as NUA in my world. This is a great resource for equity compensation and ESOP participants who have concentrated and highly appreciated stock positions. As always, I do my best to stay high level in these introductory topic podcasts.
You will want to hear this episode if you are interested in... * The simple breakdown of an NUA [0:57] * Two choices when you take a distribution out of your ESOP [2:19] * Other factors to consider with NUAs [3:57] * Three steps of taxes [4:53] * Four important requirements to take advantage of an NUA [5:52] * This week’s FLASHBACK [7:20]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode, I'm going to jump into the general personal finance arena. Let's talk about mortgages. Specifically, to pay them off early or not. I’ve shared some thoughts on this subject before on my website but with mortgage rates near all-time lows, I figured it was time to revisit.
The topic of whether or not to pay off a mortgage early is a question that often comes up in client conversations. Heck, it even comes up when I'm out for a beer with friends. Well, at least back when we were able to do that sort of thing! My initial response is usually this, odds are the numbers are going to show that it makes sense to maintain a mortgage. Paying off a mortgage is often a personal decision but if you’re looking for ways to grow your money instead of paying off your house early we should talk!
You will want to hear this episode if you are interested in... * Reasons you should not pay off your home early [1:16] * Paying off a house doesn’t mean housing expenses go away [2:10] * Why you should pay off your mortgage early [3:27] * This week’s FLASHBACK [5:19]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode of Equity Compensation Guidebook, I'm going to break a bit from the normal equity compensation topics and talk about ESOP's, which stands for Employee Stock Ownership Plan. I've had quite a few people ask me about these recently and thought if people are asking I should probably do a quick episode on them. A simple explanation of an ESOP is that it's a company funded retirement plan that holds company stock in accounts for participants. It's safe to say it is similar to a profit sharing plan.
You will want to hear this episode if you are interested in... * Explanation of an Employee Stock Ownership Plan [1:29] * Highlights of an ESOP [2:56] * One tool in your retirement plan toolbox [4:39] * Distribution rules [5:53] * This week’s FLASHBACK [8:39]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode, I'm going to quickly talk about stock splits, both regular and reverse. Reverse stocks you wonder? They do exist even though they are rare. Even though this is a relatively straightforward issue, I wanted to cover it a bit for a couple of reasons. First. I never want to assume everyone understands what a stock split is. The second is because it's front of mind as Sherwin-Williams, which is my neck of the woods recently announced a three-for-one stock split.
You will want to hear this episode if you are interested in... * What is a stock split? [1:08] * Why split a stock? [2:57] * What are reverse stock splits? [3:47] * Dates to know when it comes to splits [4:32] * This week’s FLASHBACK [5:40]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In this episode of the Equity Compensation Guidebook, I'm taking a break from talking directly about equity compensation. However, I'm staying within the world of personal finance, so don't tune out just yet. The topic today is the rule of 72. Rule may be a strong term, it's more of a guide. But everyone calls it a rule so that's what we're going with here. The rule of 72 has to do with compounding, and what's more fun than the power of compounding, right?
You will want to hear this episode if you are interested in... * How long will it take to double your money? [1:31] * This week’s FLASHBACK [4:07]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In this episode of the Equity Compensation Guidebook, I'm taking a break from talking directly about equity compensation. However, I'm staying within the world of personal finance, so don't tune out just yet. The topic today is the rule of 72. Rule may be a strong term, it's more of a guide. But everyone calls it a rule so that's what we're going with here. The rule of 72 has to do with compounding, and what's more fun than the power of compounding, right?
You will want to hear this episode if you are interested in... * How long will it take to double your money? [1:31] * This week’s FLASHBACK [4:07]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In today's episode of the Equity Compensation Guidebook, we're going to touch on one of the biggest questions in personal finance. How to transition to retirement? Specifically, as it applies to the world of equity compensation. I'm giving some official disclaimers right upfront. Retirement is almost never a simple decision. Even if you have lottery winnings, there are a lot of individual decisions that need to be made before you can make the big one of transitioning to retirement. There is no uniform rule on the right amount of money needed. There is no magic number but there are some steps to planning and today I’m going to break it down into 5.
You will want to hear this episode if you are interested in... * One of the biggest questions in personal finance [0:21] * Taking inventory of your equity compensation positions [2:32] * Adding up the value & concentration risk [3:27] * Gathering documentation [4:07] * Review documents to know what happens with unvested or unexercised positions [4:34] * Developing a plan around each stock option [5:15] * This week’s FLASHBACK [7:21]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In episode 22 of the Equity Compensation Guidebook, we are talking about exercise. I'm sure you're tired of hearing about exercising in the new year, but the exercise we're going to cover is that of stock options. While it may not strengthen your health, it certainly may strengthen your wealth! There is a simple way to exercise your options and a way that requires a little more effort. However, if you want to optimize things and keep your tax bill lower you may want to listen on.
You will want to hear this episode if you are interested in... * First things first… NSO’s...TAKE THEM! [1:04] * Don’t miss those deadlines especially when you’re in the money! [2:40] * Waiting to exercise [4:08] * Exercising options as soon as possible and holding [4:44] * The best way to figure out your best course of action [5:55] * This week’s FLASHBACK [7:38]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to episode 21 of the Equity Compensation Guidebook and the fourth and final episode of our mini-series. Today we're going to tackle the topic of the good old 83B election. WARNING: we are going to talk about taxes. However, I promise I’ll do my best to keep it a step above boring. In this episode, I’m going to tell you what an 83b is and why someone would elect to go this route. I’m also going to share the advantages and the potential risks. Enjoy the show!
You will want to hear this episode if you are interested in... * What’s an 83b election? [1:00] * Why would someone go the 83b route? [3:14] * The risk to keep in mind when deciding [6:14] * Mitigating some of the risk [7:19] * This week’s FLASHBACK [9:02]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Welcome to the Equity Compensation Guidebook and episode 3 of our mini-series. Today I will break down precisely what a non-qualified stock option— commonly referred to as an NSO— is. I won’t be covering incentive stock options since 95% of stock options are non-qualified and I don't work with any clients who have ISO's. If I tried to explain the ISO I'm sure it would be a mess since I don't cater to those clients. NSOs are not super complex. The complexity with NSOs comes into play when you exercise the options and while we'll touch briefly on that, I'm going to save that minutia for another episode.
You will want to hear this episode if you are interested in... * What is an NSO? [1:19] * Important time periods when it comes to NSOs [2:49] * When to exercise and how to pay for your options [4:05] * What to expect when it comes to taxes [6:16] * This week’s FLASHBACK [7:28]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today is part two of our series on restricted stock. Last week we talked about restricted stock units and this week we are talking restricted stock. You may hear it referred to as restricted stock awards, restricted stock grants, or stock grants. However, for this episode, we will simply stick with restricted stock. Now, you may be wondering what the difference is and why does it matter? Well, that is precisely what you will take away from today’s show. You’ll also learn about some of the benefits that come along with the RSA that you won’t get with the RSU so be sure to check out episode 19 of the Equity Compensation Guidebook!
You will want to hear this episode if you are interested in... * The key difference between restricted stock and restricted stock units [0:50] * Advantage of restricted stock versus restricted stock units [2:34] * What happens once you’re fully vested? [3:53] * What does the 83b election do and what’s the advantage? [5:36] * More ability to plan for taxes [7:40] * This week’s FLASHBACK [8:51]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In this episode of Equity Compensation Guidebook, we are going to be tackling something that on its surface isn’t super-complex but I feel it’s important enough to receive some spotlight attention and a more detailed explanation. As you can probably tell from the title, I’m referring to RSU’s, or restricted stock units. Restricted stock and restricted stock units are— as the annoying saying goes— “the same, but different” so we will cover RSU’s in this episode and restricted stock in the next, so be sure to tune into both. Now, let's dive into the details, including taxes, which I know is everyone's favorite topic.
You will want to hear this episode if you are interested in... * A simple definition of a restricted stock unit? [0:54] * The life of an RSU [1:48] * The tax talk I warned you about [3:24] * RUS’s pushing you into a tax bracket you’re unprepared for [5:56] * This week’s FLASHBACK [8:21]
What is an RSU and how to get them? A restricted stock unit is a right to receive stock after you've satisfied any conditions imposed by your employer. The conditions can be working for a company, for a certain amount of time, or hitting a sales goal. If you meet the conditions, you get the shares, if not, well, then you do not get them. That's the simplest definition I can give you.
The life of an RSU It may not sound as exciting as a trip to the Bahamas in the middle of a northern winter, but it’s more profitable! It all starts with when an employer awards you with a set number of restricted stock units on what is called a grant date. Sounds like the beginning of a fairytale, right?
As part of this award, your employer will also provide you with a document that lays out all the rules and guidelines for the RSUs. KEEP THIS IN A SAFE PLACE. This document includes the requirements that you’ll need to satisfy in order to earn and take ownership of the RSUs. These are called vesting requirements, and they have vesting dates associated with them. The requirements are usually related to performance goals. Vesting time periods come in two forms. Cliff, all of the RSU’s at once or graduated, where they will vest on a schedule over a period of time. For more on this be sure to check out the show!
This week’s FLASHBACK: My first CD (and I’m not talking certificate of deposit) Compact disks or CD’s, are still my preferred way to listen to music, even if I no longer have an awesome stereo rack with a 5 disk changer, ahhh the good ol’ days! I remember my first CD purchase. I had just bought a stereo system with the earnings from my high school job. I went to the music store at the mall for one purpose— to get my first CD. I grabbed the 2 disk hits album called “Hot Rocks” by none other than the Rolling Stones! It was packed with my favorites from 64’-71’ and I couldn’t get home fast enough to play it and see if it was worth all the hype. Let me tell you...IT WAS!
Resources & People Mentioned * Rolling Stones - go be a fan * The Rolling Stones: Hot Rocks 1964-71
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
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In this week's episode, we're going to start diving into using equity compensation to pay for college. It should be rather straightforward, right? Just sell some equity compensation, pay the applicable taxes, and then use whatever's left to pay tuition. I guess that is kind of simple, isn't it? Of course, doing it both effectively and efficiently is another story. Things such as optimizing any financial aid from the college you may qualify for, not messing up your future retirement plans, and as always not tipping Uncle Sam by paying out more in taxes than necessary. Listen up as we get down to the details!
You will want to hear this episode if you are interested in... * Selling equity compensation positions and using proceeds to pay for college [1:23] * Recap on NSO’s [3:06] * Using restricted stock unit’s [6:24] * Employee stock purchase plans [7:57] * Why you should sell the positions with the smallest gains [10:16] * This week’s FLASHBACK [12:43]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today we will be talking about another important part of equity compensation, and that is concentration risk. Perhaps you’re wondering what exactly that is and how it happens so I’ve got a few examples to clarify it for you. I’m going to share some misconceptions about holding large amounts of a single stock, especially if it’s stock in the company you work for. We will also touch on some ideas to help mitigate concentration risk. Be sure to tune it so you don’t miss a thing!
You will want to hear this episode if you are interested in... * Concentration risk… how it happens? [1:17] * Learn from market history [3:01] * Misconceptions about holding a large percentage of your portfolio in 1 stock [5:24] * Ideas to mitigate concentration risk [8:27] * Differences between stop orders and stop-limit orders [11:08] * This week’s FLASHBACK [12:50]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
On this week's episode, we're going to talk about one of the most essential components of equity compensation. Actually, it is one of the most important parts of any successful investing strategy... taxes. Who doesn't love talking about taxes? I have a mantra when it comes to investments and taxes— it's not what you make, it's what you keep— this is critical because if you lose a good portion of your investment returns to taxes every year you lose some of the effectiveness of compounding over time. None of us has complete control over our taxes. However, there are some things we can control, and today I'm going to cover some of the basics.
You will want to hear this episode if you are interested in...
- Common offerings you may have available to you [0:22]
- Compensation income vs capital gains [4:52]
- Differences in restricted stock [6:56]
- 83b election [10:51]
- Taxes on employee stock purchase plans [12:07]
- This week’s FLASHBACK [15:31]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
It seems far fetched to think that you can have too much in savings. But, can have too much in tax-deferred 401k’s? There is a lot of false information floating around out there, not just “fake news” but info that is just flat out wrong or misleading. Join me in this episode as we weed out the myths and get down to the bare bones of the matter.
You will want to hear this episode if you are interested in... * The first time I heard someone talk about too much in tax-deferred accounts [0:41] * Employer matching [3:10] * Are there long term benefits beyond the employer matching program? [6:41] * The big difference when looking at 401k vs Roth 401k [8:53] * The magic tax rate number to consider [10:58] * This week’s FLASHBACK [13:18]
Resources & People Mentioned * Nick Maggiulli - Of Dollars And Data
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today's topic is something I'm seeing more frequently with clients using charitable giving with some of their equity compensation positions. This is a great way to hit your charitable goals. There are a few tips to doing it properly so today I'm going to cover three keys to charitable giving with equity compensation.
You might have noticed a little change— well maybe it’s a big change— I’ve decided to change the name of the show. I’ve also dropped the sales tip section but you will learn more about why when you listen to the episode. Going forward the bulk of the episodes will focus on equity compensation and how to use it effectively to achieve your financial goals.
You will want to hear this episode if you are interested in... * Why the podcast has a new name [0:22] * Many forms of charitable giving [2:00] * First tip: Positions need to be fully vested [3:17] * Second tip: DO NOT sell the stock before donating it [4:52] * Third tip: Should you donate one lump sum or stretch it over time? [9:18] * This week’s FLASHBACK[11:29]
Resources & People Mentioned * Three Days live by Janes Addiction fast forward to the drum solo at 6:00 mins
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
I see articles at least once a month with advice on how to answer the question of how much you need to save for retirement. These articles all have common themes to them but there is no consistent answer. It's an individual situation. Many articles say things like having 10 times your income is the answer. This might be applicable to the 64 year old who is getting ready to retire but what about a 30 year old who has her best income earning years ahead? Tune in to hear my take on this age old question.
You will want to hear this episode if you are interested in... * The loaded question the financial media loves to ask [0:21] * Why 10x your income isn’t right for everyone [1:27] * Know what you spend! [3:18] * Projecting what retirement will look like [4:18] * Knowing your inflow numbers [5:07] * Getting a back of the napkin rough estimate [6:00] * The sales tip section: Accomplishments [7:29] * This week’s FLASHBACK [8:33]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
HSA vs FSA, Ep 11
I meet with clients during their open enrollment periods so that we can discuss their benefits packages. Medical expense is something that comes up often so we discuss Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Why these two? Well, they get used interchangeably, but they are two completely different things. In this episode, I'm going to bullet point the highlights of these two types of accounts that are both designed to help you cover out-of-pocket medical expenses so be sure to listen in.
You will want to hear this episode if you are interested in... * The Health Savings Account (HSA) highlights [0:58] * The Flexible Spending Account (FSA) highlights [2:07] * Using an HSA in retirement [4:09] * The sales tip section: Celebrating the small wins [5:52] * This week’s FLASHBACK [6:39]
Equity compensation is a tremendous way to grow your wealth directly through your company's success. However, it can get complicated quickly. My hope is that clients will take the time to understand and make sense of their equity compensation so that they are able to do the things they want in retirement. Today we will be talking about the ins and outs of stock options. Join me to learn more and how to get the most out of this time-sensitive alternative compensation option from your employer.
You will want to hear this episode if you are interested in... * A couple of truths about equity compensation [0:26] * What is a stock option? [1:38] * Common time restrictions to be aware of [2:17] * Cliff vesting [2:35] * Graded vesting [3:02] * Overall timeframe to exercise your options [3:25] * What does it mean to be “in the money” and is it as good as it sounds? [4:03] * Options for paying for your options [5:50] * When is a stock option a risk? [6:36] * Incentive vs Non-qualified stock options [8:03] * Incentive stock options (ISOs) [9:23] * The sales tip section: Choose “hell yes” clients [11:48] * This week’s FLASHBACK: School photos [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
This week I’ll play off of last week’s episode on college selection by going back a little further. Specifically, back to when your child was born. I was recently talking to someone about the power of compound interest and how early our kids can start saving for retirement. It sounds weird to talk about 16-year-olds saving for retirement, but we know the power of compound interest. What if there was a way to start saving at birth? Listen in as I go over the concept of the Baby IRA.
You will want to hear this episode if you are interested in... * The concept of the Baby IRA [1:14] * The bigger issue of taxes [2:46] * What if the Baby IRA really did exist? [4:00] * The sales tip section: Vision Boards [5:53] * This week’s GenX FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Today we are going a bit off-topic. A big part of the role I play with clients isn't just talking about improving their financial picture but helping them achieve a better work-life balance as well. So what off-topic topic are we talking about? The college selection process. I’ve been through it once already and am going through it again this year. Both experiences are turning out to be different but I feel there are a few things I can share that may help any of you who are in the same boat. Tune in to the episode for details on our experience.
You will want to hear this episode if you are interested in... * Admissions counselors and how they can make a difference [2:07] * The blend [3:04] * Your mail vs your kid’s email [4:02] * Why it’s a buyers market for shopping students [4:24] * Having your child talk to someone in the profession they may pursue [5:57] * The sales tip section: Sandler success triangle [9:31] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
In continuing our Equity Compensation series, today we are talking about ESPPs. Wondering what ESPP stands for? Well, it’s an Employee Stock Purchase Plan and the most common form of equity compensation that we will cover. It’s available to almost any full-time employee of a publicly-traded company; and for this reason, it’s my favorite kind of compensation.
So what is an ESPP exactly? It’s a great vehicle to allow employees to purchase employer stock, preferably at a discount. The advantage is you get to buy the stock from the company you work for at a price that is lower than it would be if purchased on your own. When you participate in an ESPP, your investments are held in a regular old investment account. Check out the episode to find out why and maybe some other useful tips too!
You will want to hear this episode if you are interested in... * Who can get an employee stock purchase plan? [0:21] * Advantage of an ESPP [1:25] * Key differences between an ISO & an ESPP [2:32] * How ESPPs operate [3:56] * The ins and outs of offering periods [5:02] * The sales tip section: How NOT to get referrals! [7:58] * This week’s FLASHBACK [10:17]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Many of my clients have equity compensation as part of their benefits packages. Since I've been seeing them more frequently I figured it’s something I should talk about. It’s not the simplest thing to make sense of so let's start breaking it down over the course of a “series” of episodes.
Equity compensation is a benefit an employee receives that is connected to their company stock. It can be private or public, but for most people, it is public. There are many forms but the most common I see are ESPPs, ISOs, RSUs, and RSAs. Listen to this episode to learn what all of these acronyms mean and enough of the basics to get you headed in the right direction.
You will want to hear this episode if you are interested in... * What equity compensation is? [1:14] * The most common forms of compensation [1:29] * A massive issue with equity compensation [2:21] * Understanding the terminology [4:25] * The sales tip section: Referrals [9:48] * This week’s FLASHBACK [11:23]
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
Sometimes you just don’t know what you don’t know and that was the case early in my career. I learned the hard way that financial power of attorney— commonly referred to as a POA— is an important document and one you need to have. It’s simple and inexpensive to obtain but can have painful repercussions if you need it and don’t have it. Listen to the episode to hear why.
You will want to hear this episode if you are interested in... * Why I think this document is important [0:21] * A close call and a good reason to have a POA [2:03] * What is a financial POA? [3:35] * My recommendation on who to see to get your financial POA [3:57] * The sales tip section: appointment debriefing [4:44] * This week’s FLASHBACK [5:45]
Resources & People Mentioned * Nine Inch Nails
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
A frequent topic I hear from high performing sales professionals is how to achieve a better work-life balance. I’m sure a lot of you have, like me, spent many years working 14 hours a day spending at least one day of the weekend at the office. At some point, you begin to question what’s important. Personally, it took me a long time to achieve a better balance and I’ve found it’s something you have to continuously work at. In today’s episode, I’ll be talking about balancing the four types of wealth: financial, social, time freedom, and physical. Don’t miss it, you never know, you might just learn something.
You will want to hear this episode if you are interested in... * What are the four types of wealth? [1:02] * Wealthy type #1 [1:58] * What income makes Americans happiest? [2:24] * Wealth type #2 [2:41] * What makes people as happy as doubling their income? [3:04] * Wealth type #3 [3:36] * Wealth type #4 [4:17] * The sales tip section [5:30] * This week’s FLASHBACK [6:46]
Resources & People Mentioned * Linkedin my favorite platform * Great band, lousy concert Depeche Mode
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
One of my favorite retirement savings vehicles for high-income earners is the Roth 401k. I love it because there are a handful of benefits that perfectly suit the situation most high-income earners are in. This episode is devoted to breaking down the beneficial aspects of the Roth 401k, helping you understand the situations where it might be a benefit to you personally, and looking at the things you need to consider to make your decision.
You will want to hear this episode if you are interested in... * Why the Roth 401K is such a high-value investing tool [0:14] * Should you participate in the Roth 401K through work? Here’s how [2:47] * The various things you’ll need to consider when making this decision [5:01] * The big issues when considering distributions that come out without taxes [7:42] * The sales tip of the episode: [10:25] * My flashback: The INXS concert in Richfield, OH [11:08]
Resources & People Mentioned * The Roth 401K (definition from Investopedia) * BOOK: Power Questions * BAND: INXS
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
This episode zeros in on tax savings for those who have both high and fluctuating incomes — which likely describes you if you are a sales professional. Those are exactly the people my financial advisement firm caters to, so I’m hopeful that I’ll have some insights that will be of use to you on this episode.
I’m basing my comments in this episode off an article written by Micahel Kitces, a leading blogger in the financial industry. I'm referencing his work because the way he describes the investment vehicles you can use for maximum tax savings is exactly how I view the issue. So, stick around and learn how you can make the best use of that high income you generate.
You will want to hear this episode if you are interested in...
- My tribute to the post by Michael Kitces (see below for a link) [0:14]
- Looking at my pyramid of to discover the best options for you [1:26]
- The back door Roth account [7:38]
- The mega-back-door ROTH [10:20]
- Today’s sales tip: Modify your question when someone answered the phone [13:18]
Resources & People Mentioned * Michael’s blog post I referred to * Gen X Trivia: Back To The Future
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin
There are many financial advice podcasts out there, so why should you listen to this one? I don’t believe everyone SHOULD listen to this podcast. Why? Because it’s aimed at a specific audience, those who make their living as sales professionals. If that’s not you, you may find greater benefit from a different podcast.
But if that IS you, this show is specifically FOR You. Listen to find out why I’ve decided to create a financial podcast for sales professionals and get a sample of the type of content I’ll be providing weekly.
You will want to hear this episode if you are interested in... * Why sales professionals need financial tips and advice [0:24] * It’s not what you make, it’s what you keep (minimizing taxes) [1:28] * The catch-up: your opportunity to add more to your qualified accounts [2:35] * Good sales are correlated to good questions [6:43] * My Gen X focus today - Guns N Roses album, “Appetite for Destruction” [7:46]
Resources & People Mentioned * The IRS topic page for Catch-Up Contributions * Guns N Roses album, “Appetite for Destruction”
Connect With Dan Johnson * https://forwardthinkingwm.com * Subscribe on Youtube * Follow on Linkedin