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Why a tech recruiter wanted a financial advisor that understood private stock options

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Alex has been a recruiter for over seven years and began her career at a staffing agency that specialized in technical hires (think software engineers).

She worked with various clients (aka companies) to help fill these roles and that was her first exposure to private stock options. Not because she had stock options, but because she needed to make job offers that included stock options as part of compensation packages.

“I had some baseline knowledge of equity just working with clients that would have to negotiate,” she said. But it was pretty high-level, mostly “you are getting this many stock options at this strike price,” she added.

She landed her first job at a startup and had to figure out her own stock options

Eventually, she landed her first job at a private startup, Applied Intuition, through a recommendation from a former colleague. At the time, they were a Series B startup and had about 80 employees. Suddenly, she had to figure out stock options, not just for future employees she was helping to hire, but for herself.

“I had no real knowledge of equity at that point. It was very surface level,” she said. “I generally knew what a strike price was but not to the degree that I do now.”

But it wasn’t for lack of education from her employer. “At the time, it was explained very well,” she said. “Meaning, what the offer included. But I still didn’t fully understand it. I understood the broader concepts around it but wanted to clearly understand what I was walking into and what my options were to exercise, and how that impacted my total compensation.”

“There’s so much to unpack that it can be overwhelming to the average person that has no knowledge of any of these terms,” she added.

For Alex, she didn’t only want to educate herself to be better prepared for her own situation, she also wanted future hires who joined the company to have a clear picture for their specific financial situation.“I’m educating each candidate at the offer stage on what their offers are,” she said. “And because everyone’s situation is different, and their compensation philosophies can vary, there isn’t a single talk track for every candidate,” she added.

“The type of talent our company can attract are typically people that have never worked at a startup before,” she continued. “I wanted to know more than the candidates on these topics so I was well equipped when delivering offers, and so the people I worked with had the necessary information and resources to feel confident in their decision.”

Self-education soon turned into wanting personalized financial advice

She started where most people would: researching online. That’s how she found Secfi, through articles and resources to help employees educate themselves about stock options. And, for Alex, that was the key — the focus on private company stock options.

“What stood out to me about Secfi,” she said, “was their focus on stock options, not just any general stock. And that was really important to me at the time.”

She also started looking into getting personalized financial advice. “I had talked to a couple of advisors but nobody really clicked,” she said. “And the structure of how they made their money wasn’t always aligned with what I was looking for.”

So she looked into Secfi Wealth and started speaking with Chris Arnold, Lead Financial Planner. “Chris and I just hit it off,” she said. “It felt like he was genuinely trying to help me, and it wasn’t about the commission he was going to make from me. That had been my experience with previous financial advisors, where the relationship was very transactional.” She didn’t feel that the relationship with Chris was transactional, and Secfi’s financial advisors never take a commission from clients.

It started by taking a look at her equity situation and helping her get a handle on her stock options and different plans to help her decide if she should exercise, and when. “There are a lot of tax implications associated with exercising, and when you later sell those shares, which I wasn’t too familiar with,” she said. “I’m at a startup, I’ve been here for over a year, I’ve vested X, what are my options in an ideal situation? Basically, to have the least amount of taxes for the most amount of gains.”

Her company also does tender offers around fund raises, which she expects could happen in the near future. She hadn’t participated in the past, but wanted to get ahead of her options should she have the opportunity again. While she still fully believes in the long-term prospects of her company, like an eventual IPO, she is also interested in diversifying some of her equity before then, and reinvesting it elsewhere.

Chris has been helping her understand what the difference would be depending on how many of her options she sold in a tender, which she has found very helpful in visualizing what different strategies would look like.

A strategy for her equity soon turned into a broader financial strategy

She also started speaking to Chris about her broader financial portfolio and goals. “It turned into something broader, like wanting to help with general finances and savings, and optimizing for more financial wealth down the line,” she said.

“It was more long-term strategizing and helping me achieve my long-term goals,” she added. “I was initially using an automated investment tool and it was very hands off and not involved, and it wasn’t growing as I had hoped. So, we were trying to figure out a way for longer term gains by increasing that risk profile. And, it’s done really well to date.”

At the end of the day, she just found it helpful to have someone on her side that can help her navigate financial decisions, especially her stock options. “The personable aspects of working with someone is always nice, and that’s what’s been great about working with Chris,” she said.  “I’ve enjoyed being very open and honest about where I am in my career, and Chris has been very understanding about the ups and downs of working in these types of startup environments. It’s just been really smooth. It feels like someone I know well beyond the business aspect of the relationship.”

Really, she just wanted an advisor to help figure out the hard stuff

Plus, she now has more knowledge when speaking to candidates about job offers and answering questions they have about their equity compensation. Her recruiting team is also focusing this year on a better process to scale that knowledge so that every person on the team has the tools they need to help with stock option-related questions.

“At the end of the day, they may still not understand this stuff and that’s OK,” she said. “But at least I’ve done my due diligence to give them the resources they want and need to make this decision because it’s not an easy decision to make.”

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