WealthManagement Magazine

Employees Clueless About Stock Options, Survey Says

Many don't seek an adviser's help either.More than one in 10 private sector workers own employee stock options, but they often don't understand what they've got, according to a survey by New York-based OppenheimerFunds.The August survey shows that many of the estimated 12 million employees with options may lack basic financial and tax-planning knowledge related to options. What's worse, they don't

Many don't seek an adviser's help either.

More than one in 10 private sector workers own employee stock options, but they often don't understand what they've got, according to a survey by New York-based OppenheimerFunds.

The August survey shows that many of the estimated 12 million employees with options may lack basic financial and tax-planning knowledge related to options. What's worse, they don't get professional help.

- More than one-third (39%) of option owners surveyed say they know "little" or "nothing" about their stock options. Another 35% say they know only "something."

- More than half (52%) say they know "little" or "nothing" about the tax implications of exercising options.

- Three-fourths say they know "little" or "nothing" about the alternative minimum tax.

- And 11% of respondents say they have allowed "in the money" options to expire worthless.

Despite their scant knowledge, only about a third (36%) of all option owners have gotten advice from a financial adviser about stock options. And only a third (34%) of those who have actually exercised options spoke to a financial professional first. Most employees rely on their companies for option education and some turn to family, friends and coworkers.

"We believe financial advisers have a critical role to play," says Jim Ruff, president of OppenheimerFunds Distributor. "Advisers can make a difference by ... putting together exercise and diversification strategies."

Indeed, many of the option owners surveyed had portfolios overweighted with options and company stock. About one-third have 20% or more of their financial assets in their employer's options or stock.

Oppenheimer polled 1,003 people employed in the private sector and found 107 with options. An additional 200 options holders were interviewed.

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