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Who: Randy (Sales engineer at dbt Labs) & Lily (sales at Hubspot)

Marital status: Married, 1 child (another on the way).

Equity: Incentive Stock Options at dbt Labs & Restricted Stock Units at Hubspot

Financial goals:

  • Create a plan for Randy’s dbt Labs stock options.
  • Develop a sales strategy for Lily’s Hubspot RSUs & how to optimize her ESPP
  • Understanding their cash-flow to establish concrete targets for paying down student loans & developing an annual savings strategy
  • Obtain sufficient life insurance coverage and implement an estate plan to protect & provide for their children.

Advisor recommendations & actions taken:

  • Did a cash flow analysis and created a structured spending and savings plan for Randy and his wife to enable their short-term goal of moving to Europe for an extended period, and for their long-term goal of providing for their children.
  • Utilized Lily’s vested RSUs & shares held in her employee stock purchase program (ESPP) at Hubspot to exercise additional low-strike price ISOs that Randy vested.
  • Recommended an estate planner, and worked with them and the estate planner to make sure their needs were met and included their equity, with a focus on having a plan in place for their children.

Client background:

Randy joined his first VC-backed startup, dbt Labs, and was excited to see that his offer included equity compensation in the form of Incentive Stock Options (ISOs). He didn’t totally understand how it all worked, but “I knew that I had faith in the company and I knew that you're supposed to exercise,” he said. “So I spent a lot of money to get some early shares, but I didn't understand the tax implications or the strategy.”

By strategy, he says that because he exercised at the end of the year, he exposed himself to more Alternative Minimum Tax (AMT). “Turns out if I would've just spread it out over two weeks, I would've saved a ton in something called AMT. Whoops.” He didn’t regret that he exercised because he now owned shares in his high-growth company, but it did make him more aware about his equity and what he should do with the rest he was vesting and hadn’t exercised yet. He also wanted to know how to protect the value of the shares he did exercise

A co-worker had introduced him to Secfi’s tools, and now that he owned some of his shares, he was more interested in how to value it, so he started playing around with them, especially the Stock Option Exit Calculator. He understood that the value wasn’t static and that if the company kept growing as fast as it had, the value would rise. But it also got him thinking about how this should fit into his larger financial planning as a family.

“I have a daughter and that's probably why any of this even happened,” he said. “It got me thinking, what happens if I die? Does it go to someone? Does it get taxed? Does it disappear? What if my wife and I both die? Like, what would happen to my daughter? Beyond the money, what happens to her?”

That’s when he got in touch with a Secfi Wealth financial advisor. “They took action on a need I had before I fully understood the nature of the need,” he added. He could tell that Chris really understood equity. “It's been a big point of stress for us, just general anxiety,” Randy said. Randy’s wife, Lily, also has equity at her public company. ​​”My wife

had something called RSUs, which I didn't really fully understand,” he added.

After speaking with Chris for the first time, they both felt like he asked all the right questions and fully understood their concerns. “I just breathed for the first time in probably six, seven months. We both let it out and I haven't felt money pressure since that day,” Randy said.

He also just respected the relationship Chris was building with him and his wife, which other financial professionals hadn’t done in the past. “He remembered things about my wife and he asked her about her priorities and our financial goals,” he said. Really, Chris just enabled them to develop plans for their future. “We didn't have capacity for it. We were just going week to week and we had long exceeded the point where that was

appropriate given our level of income and expenses,” Randy said. “And that's really the gift that we've been given,” he added. “The ultimate thing is that the bases are covered and now we get to choose what to do and what we actually care about, like living abroad for a few years while our family is still young.”

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