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Leavey’s Certified Executive Professional Institute helps professionals like Matt Jude become equity experts  

When Matt Jude sits down with a client to work on financial planning, he has to ask the right questions. What are your long-term goals? How many years until you want to reach those goals? What’s the current state of your portfolio?

In high-tech and startup-friendly California especially, he also needs to ask: Do you ever get paid in stock?

That’s called equity compensation. “It comes in the form of different types of ownership in the company,” Jude says. Some companies offer stock that employees earn after a certain number of years of employment, for instance, while others offer it for sale to employees at a discounted price. Each type has different investment and tax implications. “People have this great benefit, and it’s our job to help them figure out what to do with it.”

Jude was already an experienced certified financial planner (CFP) when he first encountered equity compensation. But he wanted to be able to offer a deeper understanding to clients, so he sought a new certification as an equity compensation associate (ECA) in 2022. 

“That was how I found the Leavey Executive Center and CEPI (the Certified Equity Professional Institute), and it really is the place for this,” Jude says. “I was really fortunate to have found it.”

CEPI’s ECA designation is step one in a larger program. The ECA offering includes coursework that covers everything from taxation and accounting practices around equity compensation to how company plans are designed. A proctored exam at the end of the program tests competency and rewards participants with the ECA designation. Participants may then move on to advanced levels and work toward a Certified Equity Professional (CEP) designation, but even on its own, the ECA program has been a valuable way to improve client work and dive deep into new expertise for Jude.

“The program has been a tremendous resource for me,” Jude says. “Now I have that base or foundation I can go back to any time I have questions about equity compensation.”

Keeping Up With Trends

According to the 2022 report The State of Equity Plan Management at Public and Private Companies, from Morgan Stanley, nearly one in three survey respondents — HR and other decision-makers and companies — viewed equity compensation as a critical benefit for attracting and retaining talent.

The report also noted the ways equity compensation is changing. At the time, 35 percent of companies were offering discounted stock sales to employees. Likewise, 32 percent were shortening their “vesting” windows for when employees would be eligible to earn company stock as a benefit.

That last statistic matches Jude’s anecdotal experience working with clients. “I've actually seen more of a concentration in certain plans like restricted stock units,” Jude says. “It seems like a lot of employers are kind of simplifying their offerings — not offering less, but maybe narrowing or offering more straightforward options. You just earn the stock once you’re vested. It's much simpler to receive that benefit.”

Staying on top of such trends and changes is critical for any financial planner, which is why Jude sought the ECA designation in the first place. He works primarily with individuals and couples planning for long-term goals such as retirement, so he wants to not only understand these trends, but also think about them through a very specific lens.

“I was most interested in just thinking about everything from the employee’s perspective,” Jude says. “How are these different benefits taxed? That was the number one thing that I wanted to dig into.”

For example, employee stock purchase plans are typically the most complicated in terms of taxes. How the employee is taxed may depend on a number of factors, including how much the stock was discounted for sale. Tax structure may change drastically depending on whether an employee holds on to the stock or sells it. If they do sell it, timing matters for taxes, too.

“Being able to run through concrete examples of this in coursework was valuable,” Jude says. “It means I’m prepared when I sit down with a real person and their real finances.”

Properly balancing a portfolio is another major consideration. Jude often has clients who come to him because they simply don’t know what to do with the stock they keep accumulating. If any one company’s stock becomes too high a percentage in a portfolio, it’s a significant risk. 

“If they’re also relying on that company for their income, it’s an even bigger risk,” Jude says. “If you want to keep that at bay, you start selling some of this stock. Yes, you believe in your company, so you want to keep holding some of it. But we want to keep it down to 5 or 10 percent of your portfolio, not 25 percent.”

Jude credits his work at CEPI with helping prepare him for conversations like this with clients. CEPI’s education and the ECA designation are not a one-and-done affair, either. To keep up with the latest trends, regulation and taxation, continuing education is required — specifically 30 hours of additional education every two years to maintain the certification.

Continuing education helps Jude work his specialized expertise into big-picture planning, all to the benefit of his clients. “Really, the focus is integrating this great benefit into the rest of their financial life,” Jude says.