Laura Pereira has been my good friend for a long time. I met her while she was doing her undergraduate studies in San Francisco, California. Laura is from Monterrey, Mexico, and moved to Prague for graduate school. Since being in Europe, she managed to excel in her career in corporate finance. Working for a growing international company, she accumulated a large amount of Restricted Stock Units (RSUs). Like many successful professionals, she is among those participating in the great resignation and looking for better options. In assessing her options, she must decide what to do with her vested RSUs.
RSUs are stock positions granted to high-potential employees to gain their loyalty and influence their tenure with a company. For example, on the last page of Laura’s award letter, there is a four-year vesting schedule where seven shares vest every month. Laura has been with the company for a little over three years. This is essential information for her to know when considering leaving a company and deciding what to do with her vested shares.
When considering leaving a company, after a thorough review of your award letter, there are steps to consider regarding your RSUs. The first and most obvious is to calculate your total RSUs and the vested amount and be familiar with the vesting schedule. Second, consider how much time you have left to be fully vested. It might be worth waiting a few months or even a year if it makes financial sense. Third, if you already have an employer lined up, ask them if they would match the unvested RSU dollar amount you are leaving behind. Finally, if you decide to leave, carefully consider what you will do with your vested shares. Since you’ll have a concentrated stock position, it might be worth cashing out if you need to build up savings during your transition. Additionally, you might consider a reallocation strategy to retain and grow the RSU dollar amount by diversifying. Even if the company that granted you the RSUs has a strong outlook, it’s always good to diversify a portion to mitigate the risk of a concentrated stock position.
After reviewing her options, Laura decided to cash out her vested RSUs. Given her company’s economic and overall economic outlook, she couldn’t take that much risk during her transition to her new company. In addition to reallocating a portion into a diversified stock portfolio, Laura wanted to build a cash safety net. She will also ask her new company to match the RSU dollar amount she is leaving behind.
Like Laura, if you are part of the great resignation and have an RSU Award letter you need to review, please reach out to me. It’s your money, and wisely allocating the vested amount can grow your net worth significantly in the long run.
If you already have an investment advisor congratulations. However, if you’d like to learn more about what investment advisors do for their clients, don’t hesitate to contact me or at empirKalpartners.com for an individual assessment.
Edward Vela is an Investment Advisor and Estate Planning Specialist at empiriKal partners, llc©, with 15 years of wealth management experience. He earned a Journalism Certification from the University of Massachusetts, a BA in Political Science, a Financial Planning Certification at UCLA, and an MBA from the UCLA Anderson School of Management. You can contact Edward at 925-300-8805 or email edward@empiriKalpartners.com.
