The equity compensation paradox: Highly valued, poorly understood

Equity compensation has evolved from a nice-to-have perk into one of today's most valued employee benefits. According to the 2025 Schwab Workplace Plan Participant Survey, over three-quarters of employees who receive it (76%) call it "very important," and nearly half (46%) say it's a "must-have" when considering a new job.

For employers, that's good news: They're offering something people clearly want. But beneath that enthusiasm lies a major blind spot. Most employees say they don't fully understand how their equity works—especially when it comes to managing it for taxes, valuation, and long-term planning for financial goals.

The result is a disconnect between perceived value and realized value, which can quietly undermine both employees' financial wellness and employers' ROI.

Equity's growing role in retirement—and risk

For many employees, equity is more than a performance reward. It's part of their plan for the future. Half say their equity compensation will help them reach their retirement goals. Yet according to the survey results, nearly as many (49%) now expect to retire later than they'd hoped because of inflation and market volatility. Company stock already makes up about one-third of participants' investment portfolios, on average. That level of concentration introduces significant risk—especially when market conditions are unpredictable.

Helping employees understand how to balance this asset within a broader plan can make a real difference in how they feel about their financial futures. With the right guidance, equity becomes more than a volatile holding. It becomes a strategic tool for building long-term security.

The knowledge gap: What employees don't know can cost them

Even as equity grows in importance, many employees lack the practical knowledge to use it effectively. Only 31% know how to assess its value. Just 35% understand the tax implications or how it fits into their overall portfolio according to the survey.

That uncertainty leads to reactive decision-making. Some employees might wait indefinitely for "better market conditions." Others may sell shares to cover short-term needs. Both responses leave long-term potential on the table.

The advisor advantage: How advice makes the difference

There's a clear way to change the story. Around two-thirds of employees (67%) say their financial situation warrants professional advice, yet only about 4 in 10 currently work with an advisor. That gap represents a real opportunity for employers to help connect their people to the right kind of support.

And when employees do get that help, the impact is measurable. Employees who work with an advisor are far more likely to use their equity strategically. Among those with professional guidance, 51% plan to use their stock compensation to help fund retirement, compared with just 39% of those without. And 67% say they'd feel more confident making decisions about their equity if they had professional help.

"Equity compensation only becomes a true wealth-building tool when employees have the guidance to understand, manage, and align it with their long-term goals," says Ryan Trout, director of client service and support at Schwab Stock Plan Services.

Why it matters for employers

When employees understand how their equity works, they engage with it differently. It stops feeling like a perk and starts functioning like a cornerstone of a long-term plan. That confidence translates into greater financial wellness, deeper loyalty, and a stronger sense of partnership between employees and employers.

For employers, the payoff is tangible. Employees who know how to manage their equity see value in staying. They are more financially resilient, more invested in company success, and more likely to view equity ownership as an opportunity rather than an uncertainty.

In today's market, offering equity is table stakes. Ensuring employees know how to use it demonstrates real leadership. To learn more insights, you can view the rest of the findings from our Workplace Plan Participant Survey. While there, you can choose between the stock plan or 401(k) participant survey findings.