Employer Stock Plans Can Be Risky For Uninformed

Most employer stock plan participants don't understand their investment choices and could be putting themselves at needless financial risk -- their biggest mistake being lack of diversification -- says a survey conducted by the International Assn. for Financial Planning (IAFP). It's not unusual for participants to have 90% of their investments in their company's stock, says IAFP president and financial adviser G. Joseph Votava Jr.; that level is risky whatever your company or position. Almost three-quarters of firms with sales of $50 million or less are offering stock options to all their employees. While 85% of financial advisers agree the trend toward stock ownership plans is positive, participants must make informed decisions, Votava says. More than 80% of advisers surveyed say most stock ownership plan participants don't understand critical issues such as the Alternative Minimum Tax, estate planning, tax implications of receiving and executing options, and insider trading. For more information visit the IAFP Web site or call IAFP toll-free at 888-806-PLAN.

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