The Malcolm On Money Guide to Restricted Stock Units

For many senior managers and executives, the idea of stepping off the traditional career ladder to pursue one’s own idea of professional success can be fraught with emotion and uncertainty. The feeling typically presents as a persistent, low hum beneath the surface, after one too many board meetings, another late-night flight, or a growing realization that time has become more valuable than the next title or slight pay increase.  

And whether the goal is to launch a new business from scratch, transition into consulting, scale back to part-time, or retire early, a meaningful career pivot within the next five years demands far more than the decision to do it. It requires a series of conversations with yourself, your spouse or partner, and your team of financial advisors to ensure that your exit is strategic rather than hasty.

It would be an understatement to say that exchange traded funds (ETFs) have transformed the way that everyday investors access financial markets. What was once seen as a way for professional money managers to create thematic bets and add sector tilts to otherwise vanilla portfolios can now be executed with small dollar amounts in any brokerage account and a single ticker symbol.

For investors who do not have the time, training, or inclination to track and trade individual stocks, ETFs offer efficiency among other things. Rather than researching 25 semiconductor companies, you can, for instance, gain exposure to the industry through one fund. But while ETFs make investing easier, conducting due diligence is critical. In fact, their simplicity and convenience can sometimes lull investors into doing far less research than they otherwise would.

Since the passage of the Tax Cuts and Jobs Act in 2017, the mega “backdoor Roth IRA” conversion strategy has quietly gone from a niche financial-planning technique to mainstream conversation among high-income professionals. Online Search interest in the term has surged, particularly among executives in tech, medicine, and law, as this is the group most likely to be phased out of traditional and Roth IRA contributions based on income.

On paper, the strategy appears straightforward. Retirement savers may contribute tens of thousands of dollars beyond the standard 401(k) deferral limits and can ultimately convert those funds into the Roth account within the plan where funds can grow and compound tax-free. But as is often the case in tax planning, there are various traps lurking beneath the surface that high earners are discovering whenever they execute this strategy incorrectly. 

If you’ve spent any meaningful amount of time accumulating restricted stock units (RSUs), you already know they can be both a gift and a curse. On one hand, RSUs can be one of the most powerful wealth-building tools available to employees of publicly traded companies. On the other, those same shares can quietly compound over time, becoming the single largest source of risk in your overall financial picture.

It is generally advisable that investors regularly pare their holdings so that no single investment represents more than 20% of their overall portfolio’s value—substantially reducing their concentration risk. But for those who remain employed by the same company for decades, it can be easy to watch that one stock gradually grow to represent the lion’s share of your entire net worth. And once that happens, it becomes increasingly difficult to imagine parting with said stock as time goes on.

Within the past year, software stocks have gone from market darlings to all-out pariahs. After years of premium valuations supported by low interest rates, predictable recurring revenues, and the promise of endless digital transformation, much of the sector has experienced a sharp and indiscriminate selloff. 

But in some cases, valuations across enterprise software companies have compressed meaningfully, even as the underlying business lines continue to grow, generate positive free-cash-flow, and deepen customer relationships. Now, under the surface, are a few hidden gems that long-term investors might want to bear in mind.

For more than three years, artificial intelligence and the investments tied to it have been framed as a once-in-a-generation opportunity to create wealth. It’s been touted as a technological breakthrough so powerful that it could justify almost any level of spending by the hyperscalers, who are working at breakneck speed to build the compute capacity needed to support future growth and demand. 

But recently, investors have grown more skeptical about how quickly AI investments will translate into tangible profits, and the market is beginning to look past the glossy narratives and focus instead on each company’s balance sheet. In that shift, some of the weakest links are not the companies developing the technology themselves, but rather the lenders that are financing their growth.

For a small minority, filing your annual tax return is a moment of satisfaction or even relief. But for most, it’s an unwelcome source of stress because it is the time of year when the government reconciles whether you overpaid or did not pay enough in taxes over the previous year. 

Neither occurrence is ideal. Underpay, and you owe the IRS the balance due—sometimes with penalties and interest layered on top. Overpay, and you’ve effectively given the government an interest-free loan that could have otherwise been saved, invested, or spent elsewhere throughout the year. And as incomes grow and financial lives become more complex, these seemingly small errors have a way of adding up.

The so-called Great Wealth Transfer is no longer a distant concept. Rather, it’s actively unfolding with trillions of dollars moving from Baby Boomers to their heirs. And with much of that wealth sitting inside tax-deferred workplace retirement accounts for Millennials and Gen Z beneficiaries and traditional individual retirement accounts (IRAs), this inheritance often arrives with some unexpectedly complex tax rules.

When a person inherits an IRA from a loved one, they generally must transfer the assets into what’s known as an inherited IRA—a special type of account designed for a non-spouse beneficiary. Unlike a traditional or Roth IRA, which allows the original owner to keep funds growing tax-deferred or tax-free for decades, an inherited IRA comes with strict distribution rules.

There’s an old saying that you shouldn’t keep all of your eggs in one basket. And investors often assume that keeping accounts at multiple firms enhances diversification. However, true diversification comes from the composition of your portfolio—not the number of institutions where your assets are housed.

At its core, consolidating investment accounts enhances clarity and oversight. It’s harder to assess investment mix, risk, and alignment with your goals when assets are scattered across multiple 401(k)s, IRAs, and brokerage accounts. Yet nearly a third of pre-retirees report having two or more 401(k)s, which can obscure the true shape of a portfolio and make thoughtful planning more difficult.

When it comes to estate planning, protecting wealth isn’t just about minimizing taxes or avoiding probate. It’s also about managing human behavior over time. And sometimes, naming your children as direct beneficiaries can backfire.

For instance, your young adult children might lack the financial maturity to responsibly handle a large lump sum all at once. By contrast, if the assets flow into a trust, you retain the ability to stagger distributions, using preset milestones (such as at ages 25, 30, 35), or tie distributions to achievements, such as completing an undergraduate degree.