A shift is occurring in how stock plan participants plan to utilize their company options in the future, according to Fidelity Investments. In a survey released last week, Fidelity reports that 57% of company stock assets are earmarked for eventual investment or retirement savings, where previously the lion’s share of assets was destined for paying off bills and debt.
Fidelity surveyed some 1,820 stock plan participants from 107 companies, finding that the group tends to be “aggressive savers,” putting away an average of 18% of annual household income. Their savings breakdown thus:
51% into a 401(k)-style plan.
17% into a personal savings account.
14% into company stock plans.
8% into brokerage accounts.
8% into IRA accounts.
2% into other vehicles.
In previous years, just a quarter of stock plan assets specifically were targeted for future savings and investment, where now that proportion has grown to more than half.
“Our study illustrates that more participants are now in a healthier financial position to focus on saving rather than debt relief,” says Kevin Barry, Fidelity’s executive vice president of stock plan services. “On average, stock plan participants have a very strong savings rate and are using their company stock as an important building block for their retirement portfolio.”
However, the Fidelity survey does indicate significant room for improvement in terms of education. Forty-six percent of respondents rated their general investment knowledge as a 5 or less on a scale of 0 to 10, and 71% said they cannot fully explain their company stock plan to others.
