The modern worker, particularly the tech/startup ecosystem, faces distinct financial challenges and opportunities. Financial advisors who position themselves to serve this dynamic demographic can unlock tremendous value for their clients and their practices. However, mastering the equity compensation niche and integrating it into a practice is nuanced and lacks practical resources.

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We have had conversations with hundreds of modern wealth accumulators and helped more than than 100 advisors and 75 RIAs implement or enhance their equity compensation service offering. Through this lens, we bring insights that can save advisors time and help improve client outcomes.

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If you’re a practitioner interested in serving the modern worker*, read on and explore how to tackle the top 5 obstacles of serving this niche.

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*Modern worker: self-employed professionals, creators, and startup or tech employees typically in their mid-20s to mid-40s. This piece focuses primarily on the tech/startup subset but the principles could be mapped to other domains.

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A Fundamentally Different Job to Be Done

The modern worker benefits from “Human Capital” advice as much as traditional financial advice - especially those in the tech and startup ecosystem.

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Traditional financial planning clients focus on retirement and asset preservation. Their primary goal is to increase invested capital and manage portfolio drawdowns, supported by risk, tax, and estate planning strategies. These clients have already lived through the complexities the modern worker is facing.

In contrast, modern workers get most of the value from finance and tax professionals who help navigate an uncertain future filled with rapid life transitions.

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The advisor’s value proposition extends beyond retirement goals to include:

• Navigating life transitions, sabbaticals, career changes and equity packages while making sure they’re set up for financial independence over the long run.
• Managing company stock strategies, concentrated stock risk, and the implications of variable cash flows on their finances and taxes.
• Ensuring near- and mid-term decisions support a meaningful and interesting life while supporting longer-term goals despite the uncertainty of what life will look like.
• Implementing an "agile" approach to financial planning, adapting to changes as life unfolds rather than the long feedback loops of annual financial plans.

Most wealth creation for folks in tech comes from equity upside in a growing business, not through salary, bonuses, and employee benefits. Economic upside is driven by making the right career/life decisions with a lens toward tax efficiency.

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How do you prepare yourself and your practice specifically to support the modern worker?

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Getting It Done

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1. Build Mastery and Confidence in a Unique Niche

Intention: You want to feel engaged with your craft by improving client outcomes and building a successful practice with an engaging demographic.

Obstacle: The profession’s retirement planning orientation means that few education and training programs prepare advisors to do world class work for wealth accumulators in tech.

• We have collaborated with CFPs, CPAs, EAs, ECA and CEPAs, as well as folks with graduate degrees in tax and financial planning who share this sentiment. Rarely did anyone indicate that their education background prepared them for serving clients in tech with equity compensation.

Inflection: Intentionally setting the foundation for hitting service-market-fit within the niche begins with targeted user research, not following best practices of traditional firms designed to serve a different demographic.

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Think about how to build your offering from first principles based on the needs of who you want to serve so you can directly communicate value addressing their pain points.

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Immerse yourself in what your clients are reading and learning, and the trade-offs this demographic faces. Podcasts, Hackernews, and other tech / startup forums are likely more useful for your learning curve than financial services industry newsletters.

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Study comp packages, career paths and pivots, and develop intuition for the economic trade-offs of big life events (e.g. sabbaticals, career changes, liquidity events). Advisors in our community noted breakthroughs in their business and prospecting efforts when orienting their service offering around the events and decisions that will shift their target demographic’s economic trajectory.

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2. Navigate the Complexity of Tech Sector Planning Scenarios

Intention: Acquire sufficient ecosystem context to serve as your client’s guide through unforeseen planning opportunities and challenges.

Obstacle: Mastering the 6 key areas of financial planning (Cash Flow Management, Investment Planning, Tax Planning, Retirement Planning, Insurance Planning, and Estate Planning) does not fully address the nuanced questions from prospects and clients in tech.

Inflection: Learn by doing. Case studies offer a natural bridge between theoretical knowledge and practical application when direct reps with client scenarios are limited or inaccessible.

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There is no replacement for direct experience. Ideally you can set up an apprenticeship experience - formally or informally - with an expert in the space to get some reps. Confidence in prospective client meetings comes from exposure to similar fact patterns, not from being able to regurgitate how ISOs are taxed.

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Minimally, we urge advisors to engage with peers to kick around ideas on a regular basis and build relationships with other professionals for a comprehensive client experience, like business attorneys or other finance/tax pros. Learning with others and leveraging past experiences will help you scale your offering and become a better guide. Serving as facilitator and as a Human Capital advisor in addition to the key areas of financial planning will set you apart.

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Advisors in our community indicated the best learning experience with their team was through risk-free-reps with case studies - many converted client planning opportunities into team wide learning opportunities. Access to a community of like-minded advisors focused on the same niche also helps fill in knowledge/experiential gaps to support firm momentum.

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3. Integrate Equity Compensation Planning into an Existing Business

Intention: Balance the desire to effectively serve clients in tech but not committing to only servicing this niche. Cultivate a valuable service offering for folks in tech without throwing off processes for serving traditional planning clients.

Obstacle: Addressing the needs of the modern tech worker requires different types of work. A “lite” retirement planning experience focused on investing after-tax capital won’t help you attract or retain these clients.

Inflection: Narrow the focus in the niche to a specific company stage or sector. Then, dedicate enough resources to serve the niche well and in a way that doesn’t clash with the service offering and cadence of your core business.

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Advisors in our community with existing non-tech clients experienced success with a tight focus. For example, you may focus on people with public company RSUs, folks in the biotech ecosystem, or perhaps niche on working with founders or early-stage startup employees. Narrowing the breadth of equity and career considerations helped advisors codify their pitch, workflows, client service calendar and increase their confidence. With some initial traction prospect opportunities came up in other sectors and company stages, providing more exposure and learning opportunities within the ecosystem.

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The Equity Comp Context Map below shows how focusing on a company stage narrows the equity types and planning opportunities clients would need help with.

Dedicating resources to effectively serve this niche may mean certain advisors within a firm develop mastery and lead all initiatives related to equity comp planning. Solo RIAs had the most difficulty “splitting niches” or growing within the niche without sufficiently committing to the demographic. This is partly due to the nuanced expertise required but also because of the inconsistent messaging about who gets value from the services and why. Larger firms were able to rely on the “bigness” of their brand to signal value and trust.

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The first step to effective integration is ensuring the team who serves your tech clients has a shared language. Using precise and consistent language is critical for streamlining internal collaboration and limiting errors in the analysis. Without a common understanding of terms, analyses, and planning opportunities it is difficult to level up the team and delegate work.

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The next step is a deep understanding of the tax implications of various decisions and the ability to contextualize and streamline the taxpayer experience. Contextualizing can come from setting expectations through proactive tax planning based on hypothetical scenarios and streamlining can be done by connecting the decision a client makes with the resulting tax docs. Advisors who became more hands on with tax planning indicated more success.

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4. Effective Positioning and Marketing for Success in the Tech Niche

Intention: Demonstrate passion for serving clients in tech and differentiate as the guide for your client as they build their future.

Obstacle: Effectively marketing to tech clients requires a deep understanding of their unique needs and experiences, and may conflict with existing positioning.

Inflection: Position as a “Human Capital” Advisor as much as a Financial Advisor. Look beyond different equity types and offer an informed perspective for the pivotal life moments specific to the demographic.

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Attracting your ideal client, particularly in a new niche, will require time and consistency. Advisors in our community have seen success by creating marketing opportunities from their learning moments. Pulling directly from your experience serving this niche or even your learnings as you research the trade-offs can be a great way to add value to prospective clients. Education is more effective within the context of an important decision the prospect has. Signaling expertise in one planning scenario can create client opportunities with adjacent pain points and experiences, for example biotech clients to AI prospects or public company executives to pre-IPO executives.

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For positioning strategy, take a page out of the startup playbook. Startups look for “product-market-fit” by building specifically for users, Y Combinator encourages founders to “build something people want”. Reinforce your positioning efforts by creating a service offering roadmap to hit “service-market-fit” based on what your target demographic wants. It’s not just about your ability to help clients with their current pain point, there is value in connecting the current decision to future decisions.

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Here are a few examples of what some of the most successful firms have done to differentiate from the rest:

• Relationships with secondary brokers and others who provide liquidity on private company stock.
• Have a startup attorney on retainer to help evaluate job offers and private investment opportunities
  • Go the extra mile to triangulate comp packages and equity grant targets with market data to help your client negotiate for a strong package that fits their life, risk capacity, and goals.
• Do tax returns in house or minimally, be deeply involved in the tax return process to streamline the taxpayer experience.some text
  • Be careful of keeping in-depth tax planning at arm's length. Being the core strategist doesn’t mean completing the return, but it does mean being actively involved enough to manage expectations to ensure no surprises at filing.
• Coordinate with tax attorneys to help with tricky planning opportunities.
  • Part of proactive tax planning includes things like clarifying QSBS eligibility or the tax implications of a loan against company stock.

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5. Determine the Right Pricing Model for Your Tech Client Services

Intention: Set a sustainable and justifiable fee structure for filling the new advisory role that drives outsized value for this niche.

Obstacle: Charging enough to compensate for the complexity and open-ended nature of the value proposition but not so much that all prospects say no or are unable to pay.

• Typical % of AUM fee structure, especially those with minimums, can make launching an offering difficult. This is more true for pre-liquidity folks and those in early-stage startups.
• Cultivating a niche within a practice can make this more difficult. This subset may have an uncertain liquidity timelines making it hard to project revenue growth and a different client service calendar relative to the core client base.

Inflection: Develop a pricing model that reflects the value added and effort to provide a modern wealth management experience.

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Advisors in our community have seen success with a range of pricing models, some of which turned out to be more scalable than others.

• AUM-only
  • Think twice about AUM-only for this niche unless you already have a foothold in the market as a premium offering for folks who already have investable assets.
  • This demographic often has an adverse reaction to AUM-only as it’s most disconnected with the value prop of a “human capital advisor”.
• Flat Fee
  • Starting in the $3,000 range up to $25,000+. Sometimes offering different pricing for single and married couples, or based on the types of equity received. But the difference in fees across client archetypes may not be dynamic enough to compensate for the complexity or capture upside in the outcomes you helped improve.
  • The key is to avoid asymmetry of effort relative to fees. If your service offering exposes you to countless rabbit holes to navigate with your client, you want a straightforward process to monetizing the economic gains from that effort.
• Flat Fee + tiered AUM
  • Often positioned as a “minimum annual retainer” that may also include the first $X AUM, above which a tiered AUM fee schedule will be applied. When some AUM is included in the annual retainer it incentives long-term investing behavior without an immediate increase in fees.
  • This is a more scalable example of the flat fee model, which may or may not start at a lower price point.
• Fee based on % of income and/or net worth
  • Easier to connect to value prop than pure AUM, more complex to implement than others.
  • May be difficult to explain since buyers pattern match. Especially when income each year can vary drastically with company stock price or decisions around company stock.

Takeaways

The investment in your core service offering for tech folks is a balancing act made easier by focusing on these key 5 areas:

1. Build Mastery and Confidence in a Unique Niche
   • Think about how to build your offering from first principles based on the needs of who you want to serve so you can directly communicate value addressing their pain points.
2. Navigate the Complexity of Tech Sector Planning Scenarios
   • Client scenarios and case studies are the best way to learn the unique opportunities to add value beyond the traditional key areas of financial planning.
3. Integrate Equity Compensation Planning into an Existing Business
   • Narrow the focus in the niche to a specific company stage or sector and develop an understanding of terms, analyses, and planning opportunities.
4. Effective Positioning and Marketing for Success in the Tech Niche
   • Create marketing opportunities from learning moments. Pulling directly from your experience servicing this niche, or even your learnings as you research the trade-offs and the community’s questions and concerns, can be a great way to add value to prospective clients.
5. Determine the Right Pricing Model for Tech Client Services
   • It is less about whether the starting fee is low or high, and more about whether your clients’ success leads to the success of your firm. When you have hit service-market-fit and your clients find you indispensable, you will hear comments like “I look forward to having a lot more money so we can pay you more.”