Got lots of clients with complicated stock option plans? Could you use a little assistance with calculating the tax ramifications? StockOpter, an Excel-based program, helps you evaluate employee stock option exercise and sell strategies.
Several reps say using StockOpter enables them to maximize clients' total portfolio value while achieving annual after-tax cash flow objectives.
“It's not for the faint of heart, and it is certainly not for a beginner,” says Beth Walker, a retirement planning adviser at Parker Financial in Las Vegas. “But if you are very serious about wanting to offer excellent advice in the area of stock options, I can't imagine sitting down with a client without that tool in your little bag of tricks.”
Many of the major brokerage firms are still evaluating the program and none have made it available to reps yet, according to developer Net Worth Strategies of Bend, Ore. As a result, the early adopters of StockOpter are primarily independent financial advisers.
Walker has been using StockOpter since August. She says it makes her job easier. She particularly likes how comparisons of ordinary income tax consequences and alternative minimum tax consequences are built into the program. Walker also uses the graphing overlay to give her a visual sense of several different scenarios.
More importantly, Walker says the program helps her clients. “It allows them to make educated decisions about their exercise strategies,” she says. “It also assists them in understanding the complexity of their stock option compensation.”
Pat Jennerjohn, owner of Focused Finance in Oakland, Calif., has been using StockOpter for almost two years. She says the program feels familiar and saves time.
“I like the fact that it is still an Excel spreadsheet, and I can understand what is going on, but the advantages are that someone else built it for me,” she says.
Jennerjohn also says that StockOpter simplifies the planning process for clients. “It gives them a very clear report once we decide upon a strategy and gives us some very good condensed information.”
StockOpter is compatible with the entire suite of Microsoft Office products and can be used in conjunction with Microsoft Word documents or PowerPoint presentations.
The program handles incentive stock options, nonqualified stock options and restricted stock plans. It instantly calculates tax consequences of option activity. It also displays updated after-tax cash flow and total portfolio value. Multiple scenarios can be built, analyzed and graphed.
The automatic aspects of the program help with productivity, reps say. Users can simulate a number of different exercise and sell strategies, and plot the after-tax cash flow and net-worth consequences of those strategies.
For those with less expertise in the area of options planning, Net Worth Strategies provides a one-day training session.
The program costs $695 with a $395 annual renewal fee. For more information about the product, check out www.networthstrategies.com.