Upticks: RSUs, ESPPs & Options: Keep, Sell, or Convert?
By Luke Sullivan on June 12, 2025
Sitting on a pile of company stock and not sure what to do with it? Jake and Cory unpack the four biggest pitfalls employees face with RSUs, ESPPs, and stock options—from tax confusion to emotional attachment—and share a simple framework to help you make more informed decisions. With real-life stories, practical strategies, and a dose of myth-busting, this episode will help you turn your equity compensation into a powerful part of your retirement plan.
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Read an overview of the conversation below
Understanding RSUs, ESPPs, and Stock Options
Restricted Stock Units (RSUs), Employee Stock Purchase Plans (ESPPs), and stock options are increasingly common components of compensation packages, especially for corporate employees and executives. Yet, as Jake, a seasoned wealth advisor, points out, “[many] corporate employees don’t have a clear plan for their RSUs, ESPPs or options.” Many individuals either have no strategy at all or use their equity sporadically—funding vacations, college tuition, or mortgage payments—without a cohesive financial plan. As Cory adds, “It’s generally one of those two. Either no plan or a loosely defined one.” The key takeaway is that equity compensation should be treated as a strategic asset, not a windfall.
The Four Pitfalls of Equity Compensation
Taxes: Many people are paralyzed by the complexity of tax implications. Cory offers a helpful perspective: “If you are paying taxes, that means you made money, which is not a bad thing.” Jake adds that their team models out each grant’s cost basis and projected tax implications to help clients make informed decisions. While they’re not CPAs, they can provide planning insights that complement professional tax advice.
Market Volatility: Company stock can be highly volatile, and tying too much of your portfolio to one stock is risky. Jake warns, “If you’ve got more than 20% of your investment portfolio in your company stock, you are taking a severe risk.” Emotional reactions to stock performance—feeling euphoric when it’s up and panicked when it’s down—can lead to poor decisions. A plan helps mitigate these emotional swings.
Emotional Attachment: Employees often feel a sense of loyalty or pride in their company, especially those in leadership roles. Jake acknowledges this but reminds listeners, “Even CEOs sell company stock… You have to take care of yourself first.” Emotional attachment should not override financial prudence. As Cory puts it, “You can still be a great corporate citizen… without putting 50% of your liquid assets in the company stock.”
FOMO: The fear of missing out can be powerful. Cory recalls a headline that perfectly captures this sentiment: “Everyone is getting hilariously rich except for you.” This mindset can lead to holding onto stock longer than is wise, hoping for a big payoff. Jake emphasizes that money should be aligned with purpose and planning—not ego or hype.
Framework for Equity Decisions
To navigate these challenges, Jake introduces a three-part decision-making framework: decide how much to keep, how much to sell, and how much to convert. The first step is determining what portion of your equity you want to retain for long-term growth—ideally under 20% of your total retirement assets. “Let’s say you’ve got $2 million, then we want less than $400,000 in company stock,” Jake explains. The second step is selling excess stock to diversify and reduce risk. This doesn’t mean abandoning your company; it means being strategic. “Selling is not disloyal. It’s smart planning,” Jake emphasizes. The third step involves converting stock options or ESPPs into cash, especially when they’ve vested or when blackout periods end. This framework helps align equity decisions with tax planning, investment timing, and retirement goals.
Real-World Lessons
Jake shares an example of clients whose company was acquired, forcing them to liquidate all their stock at once. “They didn’t lose money, but they lost their ability to control their taxes,” he explains. Cory recounts a cautionary tale of a client who quadrupled their investment in a single stock before retirement but refused to diversify. “The year after they retired, the stock went down 50%,” Cory says. Even after the stock recovered, the client couldn’t let go due to FOMO. These stories underscore the importance of having a plan before market events or corporate actions force your hand.
Equity as a Modern Retirement Tool
Equity compensation, when managed wisely, can be a powerful part of a retirement plan. Jake likens it to a modern version of a pension: “It’s almost like a new pension, where clients that have these types of benefits… their financial plans typically can be in better shape.” However, unlike traditional pensions, the responsibility for managing RSUs, ESPPs, and stock options falls squarely on the individual. “It’s on you to figure out as the individual,” Cory notes. That’s why working with a financial advisor who understands the nuances of equity compensation is crucial. From modeling tax implications to running “what-if” scenarios, advisors can help clients make more informed decisions. As Jake concludes, “Invest with intention… Align it with your retirement plan.”
RSUs, ESPPs, and stock options aren’t just perks—they’re powerful tools. With the right strategy, they can play a key role in your financial plan. Not sure where to start? Let’s talk! Schedule a quick consultation and get a strategy tailored to your goals.
Thank you for tuning in, we hope you have a great week!
