What challenges arise when employees are granted equity in a privately held firm. Ownership can be obscure. What steps should people take?

When employees can’t see, value, or understand the private-company stock granted to them by their firm, they tend to dismiss it entirely. For independent RIA owners, this gap between ownership and engagement is a significant cultural and operational risk. For many advisory firms, private-company stock has become a core element of compensation strategy. Too often, however, owners treat stock communication as a one-time disclosure. Equity grants to staffers are accompanied by dense legal documentation that’s quickly forgotten and rarely revisited. There’s hardly any follow-up, and almost never a clear explanation of how or when equity might convert to actual value.

Against this backdrop, ownership becomes a black box, obscure to those it’s meant to motivate and retain over the long term. In short, when company-stock ownership feels inaccessible or irrelevant, the firm forfeits a vital lever for loyalty and engagement. 

(Editor's note: as an aside, there is also the parallel issue of concentration risk, which can arise when senior staff, for example, are remunerated with company stock.)

To address this issue is Andrew Marsh, who is vice chairman at Dynasty Financial Partners, the St Petersburg-headquartered group of wealth management firms in the US. The editors are pleased to share these insights, which are highly relevant today. The customary editorial disclaimers apply. To respond with suggestions or comments, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com
 

When employees can’t see, value, or understand the private-company stock granted to them by their firm, they tend to dismiss it entirely. For independent RIA owners, this gap between ownership and engagement is a significant cultural and operational risk.

For many advisory firms, private-company stock has become a core element of compensation strategy. Too often, however, owners treat stock communication as a one-time disclosure. Equity grants to staffers are accompanied by dense legal documentation that’s quickly forgotten and rarely revisited. There’s hardly any follow-up, and almost never a clear explanation of how or when equity might convert to actual value.

Against this backdrop, ownership becomes a black box, obscure to those it’s meant to motivate and retain over the long term. In short, when company-stock ownership feels inaccessible or irrelevant, the firm forfeits a vital lever for loyalty and engagement.

Stock can't motivate if no one understands it
Even among investment advisory firms, employees often have a limited understanding of their company-stock holdings. It’s a simple truth that, lacking continuous reinforcement, even the most sophisticated employees will wonder how to access their shares, assess their value, or integrate them into their financial plans.

And many staffers will be reluctant to ask – either for fear of seeming ignorant or having one foot outside. The result is an impasse that, over time, leads many employees to conclude that their equity is irrelevant.

The problem isn’t that employees are tuning out. It’s that owners are leaving them in the dark.

Independent RIAs that offer stock should offer clear and continuous education. A straightforward FAQ explaining ownership terms, vesting schedules, valuation methods, and eventual liquidity possibilities is a necessary start. Regular updates can help employees treat their company stock as a meaningful part of their financial future.

Transparency about a firm’s stock isn’t just a box to check. It’s a foundation for building trust, an ownership culture, and long-term alignment among support staff, advisors, and founders.

Building an internal understanding of stock ownership is only the first step. Independent RIAs should also make sure partners and leadership teams can explain ownership clearly, especially when recruiting next-generation advisors or retaining senior talent. This calls for collaboration among founders, legal counsel, and perhaps outside consultants.

At this stage, it’s not just a compliance exercise anymore. A well-structured stock program is a strategic advantage for firms competing for talent in a consolidating marketplace.

When ownership changes the way people work
In my time leading an advisory firm with more than $30 billion in client assets, I saw firsthand how offering private company stock changed everything about our internal culture. When people begin to think like owners instead of employees, their relationship to the firm fundamentally shifts.

They manage resources more carefully, invest time in initiatives that benefit the whole, and take greater responsibility for outcomes.

We saw a "we” mentality take hold, replacing the transactional mindset that often creeps into larger organizations. People didn't just show up to do their jobs; they showed up to build something.

Ownership also became a powerful recruitment tool. Advisors who spent their careers helping clients build wealth through concentrated stock positions began to envision a similar path for themselves inside our firm.

Stock ownership isn't a universal fix, however. It can backfire if employees see allocations as purely symbolic or fundamentally unfair. I’ve seen this firsthand. When we reported strong stock growth at my former firm, not everyone was pleased. For employees with small grants, the impact was negligible – and they let us know it. Instead of bringing the team together, the program quietly created a divide between those who held meaningful equity and those who didn’t. That feedback pushed us to take a harder look at how equity was allocated – and to be more transparent about what it could realistically deliver.

Without liquidity, even good equity turns sour
Liquidity and cost are even deeper issues. When there’s no clearly marked path to realizing value – no timeline, and no market – frustration builds, especially when growth slows or rumors of a business sale spread. For this reason, firms need to be clear about what employees can expect: vesting schedules, redemption opportunities, restrictions, potential costs, and tax consequences. Without this clarity, even well-intentioned stock programs can feel misleading or hollow.

To address these risks, we issued quarterly statements showing grant dates, share classes, original valuations, and estimated current values. We also set up an internal liquidity pool, giving employees limited opportunities to buy and sell shares within the firm. These steps made ownership tangible, and helped strengthen employee commitment across the firm.

Transparency carries one clear risk: when valuations drop, employees notice, and not everyone reacts well. But silence breeds more doubt. Advisors pay attention to signs of a firm’s health, and when owners fail to communicate clearly the value and future of private stock, uncertainty takes root. Extending stock ownership to employees tests a firm’s leadership. It demands clear, consistent communication, or employees will stop trusting what they’ve been given.

Done right, stock ownership builds more than wealth. It aligns interests, deepens trust, and encourages long-term thinking and engagement. But it involves more than granting shares. It calls for clarity, fairness, education, and consistent follow-through.

In the end, extending stock ownership to employees isn’t just a financial decision. It’s a test of trust and a commitment to the firm’s future.

Andrew Marsh

Andrew Marsh, vice chairman and head of core services at Dynasty Financial Partners, focuses primarily on enhancing and strengthening the existing client experience. He oversees strategic business reviews and is responsible for ensuring that Dynasty’s core outsourced services offering aligns with the needs of the RIAs Dynasty serves. Marsh's career in the wealth management industry spans over thirty years. He founded and led, in the role of president and CEO, Richardson Wealth (formerly GMP Private Client and Richardson GMP) from 2004 until he retired from the firm in 2021. Richardson Wealth became a prominent independent wealth firm in Canada and expanded to more than 160 teams, managing over $30 billion before going public in 2020.