Switching equity plan providers during macro uncertainty

Editor’s note: The perspectives expressed in this commentary are the author’s alone. The following is a paid thought leadership piece from The Plaza Group at Morgan Stanley in Leawood, Kansas.

Discover the benefits of evaluating a new equity plan provider; Managing equity plans can play a critical role in  fostering company ownership culture

Managing equity plans could play a critical role in fostering an ownership culture within your company, centered around the following two core principles: 

1. Attracting and retaining top talent by empowering employees to feel invested in the company and their own financial success. 
2. Supporting equity initiatives while efficiently managing the growing costs and complexities of administering a global equity plan. 

To achieve these objectives, partnering with an equity compensation provider that is equipped with the right technology and resources could be helpful. If your current provider is falling short, it may be time to consider a switch. 

Although switching providers can be challenging, particularly in times of economic uncertainty and budget constraints, carefully evaluating the potential benefits offered by a new provider and asking the following questions could enable you to make an informed decision before proceeding: 

One effective approach is to start by engaging with your internal stakeholders and teams involved in equity plan management. This includes holding open discussions to understand their concerns, gather feedback and address any questions while also utilizing a potential stock plan provider for support. For instance, Morgan Stanley at Work initiates each new prospective relationship by conducting a thorough preliminary meeting. This meeting serves as a platform to understand your company’s objectives, challenges, equity types issued to participants and long-term goals. We then develop a tailored plan to outline how we could help address your company’s specific needs, reduce costs and enhance operational efficiencies. 

This transparent approach could arm you with the tools and resources needed to build support among internal stakeholders, navigate potential challenges and arrive at an informed decision that aligns with your company’s objectives.

Can switching equity providers help improve the ROI of my equity plan? 

Granting equity awards can constitute a significant business expense. However, if employees don’t understand the value of what they’re receiving, the awards may not have their full impact — and companies may end up spending more in the future to attract and retain top talent. 

Amid the current environment of tightened hiring and budgets, transitioning to a new equity plan provider may present an opportunity to enhance the communication of equity value to employees, especially through comprehensive education initiatives. Ultimately, by fostering a better understanding of the long-term worth of their equity, companies may have the potential to reduce the costs associated with employee attrition and talent acquisition. 

Will a new equity provider enhance the efficiency of my team? 

Exploring and transitioning to a new equity plan provider may require an initial investment, but it could prove to be a valuable decision if it ultimately helps your company save time, budget and resources. 

One crucial aspect to consider when assessing the potential impact of a new equity plan provider is their commitment to continuous improvement. Advanced features, such as workflow automation and integrations with HRIS and payroll systems, could enhance the efficiency of plan administrators, allowing them to allocate more time toward engaging participants effectively. 

Additionally, you may want to consider the level of flexibility offered by an equity plan provider. During times of market turbulence, if your company intends to adjust its equity compensation strategy, a new provider may offer greater agility than your current provider. 

How can I manage the time and resources required for retraining my team on a new system?

Retraining a team on a new system can be a challenging endeavor that requires careful time and resource management. It is important to assess a potential new provider’s commitment to offering robust training and support. 

To address this challenge, consider looking for a provider that offers comprehensive training programs tailored to your company’s needs, including educational modules, tutorials and documentation, to ensure a smooth transition and minimize disruptions. Additionally, consider their level of support during the migration process and any ongoing assistance for plan administrators and participants. 

By choosing a provider that prioritizes effective training and ongoing support, you could streamline the retraining process, optimize resources and minimize the time required to get your team up to speed on the new system. 

What considerations should be taken when migrating data to a new equity plan provider’s platform? 

The process of transitioning to a new equity plan provider often entails transferring a substantial amount of data from one system to another. This task can consume significant time and resources, particularly when dealing with disparate sources of information. 

To streamline the data migration process, it could be beneficial to seek a provider with prior experience in handling similar migrations alongside clear documentation, dedicated migration and implementation specialists, and proven mapping tools. For example, features like application programming interface (API) facilitate seamless integration between your systems, including external vendor platforms and internal applications. By utilizing APIs, the need for extensive manual extraction and digital transfer of data between multiple disparate platforms could be greatly reduced.* This automation could significantly accelerate the data transfer, transforming the process from days to minutes, or even seconds, with minimal involvement from plan administrators. 

How can I address internal concerns and arrive at an informed decision? 

When considering a switch in equity plan providers, it’s natural for internal concerns to arise. To address these concerns and make an informed decision, effective communication and transparency are key. 

One effective approach is to start by engaging with your internal stakeholders and teams involved in equity plan management. This includes holding open discussions to understand their concerns, gather feedback and address any questions while also utilizing a potential stock plan provider for support. For instance, Morgan Stanley at Work initiates each new prospective relationship by conducting a thorough preliminary meeting. This meeting serves as a platform to understand your company’s objectives, challenges, equity types issued to participants and long-term goals. We then develop a tailored plan to outline how we could help address your company’s specific needs, reduce costs and enhance operational efficiencies. 

This transparent approach could arm you with the tools and resources needed to build support among internal stakeholders, navigate potential challenges and arrive at an informed decision that aligns with your company’s objectives.

The Plaza Group at Morgan Stanley: David Salach, Teri Salach, Sheila K. Davis, and Jennifer Denning; photo courtesy of The Plaza Group

We’re on this journey with you 

Feeling nervous about switching platforms is normal. However, with the right provider supporting you, you could unlock a myriad of benefits while enhancing organizational efficiency and employee satisfaction in the long run. 

At Morgan Stanley at Work, our experienced professionals have assisted companies of all sizes in smoothly transitioning to our platforms. In fact, over the past year alone, we have successfully converted more than 200 clients from various major stock plan providers to Morgan Stanley at Work. 

Whether you are already considering us as a provider or are new to the conversation, we encourage you to reach out. Don’t let concerns hold you back from a better equity plan solution. Together, we could make your transition a success. 

* Depending on the population size and number of transactions, we may recommend a file transfer as an alternate for optimal data migration.

Disclosure: 

Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor. 

The Plaza Group at Morgan Stanley is comprised of Teri L. Salach, CIMA®, CWS®, Wealth Advisor, Sheila K. Davis, CFP®, Financial Advisor, Jennifer L. Denning, CFP®, Financial Advisor, and David M. Salach, Financial Advisor, in Leawood, KS at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). They can be reached by email at [email protected] or by telephone at (913) 402-5264. Their website is http://advisor.morganstanley.com/theplazagroupkc

This article has been prepared for informational purposes only. The information and data in the article has been obtained from sources outside of Morgan Stanley. Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of the information or data from sources outside of Morgan Stanley. It does not provide individually tailored investment advice and has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this article may not be appropriate for all investors. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. 

Morgan Stanley and its affiliates and employees do not provide tax or legal advice. Please consult your personal tax and legal advisors for matters regarding taxation and tax planning, and legal matters.

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