If you’re a tech employee, you’ve probably enjoyed some amazing perks—great benefits, equity compensation, free lunches and much more.
But lately, things have gotten more rocky with tech companies with layoffs increasing and tech stock prices taking a hit. Suddenly, that equity you’ve been given or promised doesn’t feel so secure. Your company’s success shouldn’t control your entire financial future—especially in today’s fast changing world.
Here’s how you can you can protect your financial future while still benefiting from opportunities that tech compensation offers.
Concentration Risk
Many tech workers don’t realize that when your employer is also your primary investment, you are actually facing a triple concentration risk:
- Income risk – Your salary and bonuses depend on company performance
- Career risk – Your professional growth is tied to one organization
- Investment risk – Your net worth fluctuates with a single stock
The reality is that tech can be a rollercoaster. Layoffs are up in 2025, stock prices are down, and it has been hitting net worth hard for some. If your portfolio is all company stock, you feel every dip. Think of it this way—if most of your wealth is in your employer’s stock, you’re basically handing your financial fate to one company.
I often advise my tech employee clients to check their exposure by looking at their overall investments. If more than 20% or more of your portfolio is in your employer’s stock, that’s usually a red flag. This can easily create a scenario where your company’s downturn could threaten your job security, income, and investments.
I’ve seen tech workers lose big when their company stumbles—and lately, that’s been happening more. For instance, I recently met with a tech professional, Alex, who had 70% of his savings in his company’s stock. When layoffs at his company hit, and the stock dropped 50% this year, his dreams of buying likely got pushed back years.
Managing Your Equity Compensation
Tech professionals face unique challenges when it comes to equity compensation, including complex tax implications and irregular cash flow. To navigate these, you’ll want to:
- Know the specific mechanics of your RSUs, options, or ESPPs, including vesting schedules and tax consequences
- Prepare for tax bills from vesting events, especially if you’re subject to Alternative Minimum Tax (AMT)
- View your company stock as just one component of your wealth-building strategy
How to Diversify?
The best way to manage this risk is to build a resilient financial strategy using diversification. Here are a few approaches:
- Create a disciplined plan to sell vested shares according to a predetermined schedule rather than making emotional decisions. Whether it’s selling a fixed percentage each quarter or after hitting certain price targets, consistency is key.
- Work with a professional to minimize the impact of capital gains when selling company stock.
- Allocate to other investments such as a diversified portfolio of stocks or ETFs or other asset classes that don’t correlate with tech industry performance. By branching out, you might catch gains from other markets, balancing out the tech sector’s wild swings.
Final Thoughts
Many employees forget that your relationship with your employer is fundamentally a business arrangement and I’ve seen many clients fall in to the loyalty trap: “I love my company”.
You’ve poured your heart into it, and that stock feels personal. But letting emotions steer your investments can leave you exposed. As a financial advisor I’ve seen firsthand how tying too much of your net worth to your employer’s stock can backfire.
The companies that issue equity compensation use stock as a strategic tool to align your interests with theirs while managing their cash flow. Your foremost responsibility is to your own financial wellbeing and that of your family.
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