Wealth Management for Tech Employees
RSUs, stock options, and concentrated equity are incredible wealth-building tools — if you manage them well. The wrong decisions can be costly.
Client Profile
Meet Michael & Sarah
Michael is a VP of Engineering at a late-stage tech company. Sarah is a senior data scientist at a public software firm. Together, they have accumulated $2.5M in RSUs — and their combined equity exposure means over 80% of their net worth is in employer stock. They've been vaguely aware of their AMT exposure on ISOs but have never had a comprehensive plan. They want to diversify without triggering a tax catastrophe, and they're not sure what a 10b5-1 plan is or whether they need one.
These are hypothetical scenarios for illustrative purposes only and do not represent actual clients or results.
The Challenges You Face
Concentrated Stock Risk
Years of RSU vesting create portfolios dominated by a single employer. If the stock drops 40%, so does your net worth. Systematic diversification is critical — but has to be done strategically.
AMT Exposure on ISOs
Incentive stock options create Alternative Minimum Tax liability at exercise even if you don't sell. Getting this wrong can generate a six-figure tax bill on paper gains you haven't realized.
Vesting Tax Events
RSUs are taxed as ordinary income the moment they vest — whether you want to sell or not. Managing the tax impact of each vesting event requires advance planning, not reactive decisions.
IPO / Liquidity Event Complexity
A company going public creates a sudden, large, time-sensitive decision: when to sell, how much, what lock-up restrictions apply, and how to manage the tax consequences.
QSBS Opportunity
Early employees at qualifying startups may be eligible for the Qualified Small Business Stock exclusion — potentially eliminating federal capital gains tax on up to $10M in gains for those who qualify. Most never claim it because they didn't know to track it.
Dual-Income Complexity
Couples where both spouses work at tech companies face compounded equity complexity: two vesting schedules, two sets of trading windows, two tax situations that interact in ways that require careful coordination.
How Diamond Mountain Financial Helps
Equity Compensation Audit
We map your complete equity picture: RSU vesting schedule, ISO grants with strike prices and expiration dates, ESPP enrollment, and any pre-IPO equity. We calculate your current concentration and build a clear picture of what you own, what it's worth, and what taxes you owe when.
ISO Exercise Strategy with AMT Modeling
We model how many ISOs you can exercise each year without triggering AMT, how to time exercises relative to your income and other deductions, and how AMT credits from prior years can be recovered. ISO strategy requires multi-year modeling — it's rarely optimal to make decisions year by year.
RSU Sell and Hold Strategy
We recommend a systematic approach to RSU proceeds: what to sell immediately (to avoid concentration growth), what to hold for long-term capital gain treatment, and how to use proceeds to build a diversified portfolio. We integrate this with tax-loss harvesting opportunities across your full portfolio.
10b5-1 Plan Coordination (If Applicable)
For employees subject to insider trading restrictions, we help coordinate the setup of a 10b5-1 trading plan with your legal counsel — establishing a pre-arranged selling schedule that lets you diversify systematically regardless of blackout periods.
QSBS and Pre-IPO Planning
If you hold equity in a qualifying startup, we evaluate your eligibility for QSBS exclusion and help you document and preserve the qualifying status. For pre-IPO employees, we model post-IPO lock-up expiration strategies and coordinate with your estate attorney on gifting strategies.
Integrated Financial Plan
Your equity strategy is integrated with your retirement savings, insurance coverage, home purchase plan, and long-term goals. We build a plan that treats your equity for what it is: concentrated, volatile, tax-complex wealth that requires active management.
Frequently Asked Questions
What should I do with my RSUs when they vest?
The default answer for most employees is 'sell immediately' — RSU income is taxed at vesting regardless, and holding creates concentrated stock risk without a tax benefit. But the right answer depends on your tax situation, your belief in the company, your concentration level, and your other financial goals. We model the alternatives so you can make an informed decision, not a default one.
How do I avoid AMT on my stock options?
You can't always avoid AMT entirely, but you can manage it. The key is knowing your AMT crossover point each year — how many ISOs you can exercise before AMT kicks in — and exercising up to that limit. Doing this consistently over multiple years allows you to diversify, start the long-term capital gain clock, and recover AMT credits over time. This requires annual modeling, not a one-time calculation.
What is a concentrated stock position and why is it risky?
A concentrated position means a large percentage of your net worth is in a single stock. The risk: if that stock drops 50%, so does your net worth. The academic evidence is clear that concentration dramatically increases portfolio volatility without a reliable expected return premium. For most tech employees, the answer isn't to sell everything immediately — it's to have a systematic plan to reduce concentration over time, in a tax-efficient way.
How does a 10b5-1 plan help me diversify without triggering immediate taxes?
A 10b5-1 plan doesn't reduce taxes — it removes a scheduling constraint. It allows executives and insiders to sell stock on a predetermined schedule during periods when they would otherwise be restricted (blackout windows, possession of non-public information). The tax treatment of sales under a 10b5-1 is the same as any other sale. What changes is that you can diversify systematically rather than only during brief open trading windows.