Company
Carta
Project Type
New product
Duration
3 months to launch
My role
As the lead UX designer and PM driving the product to completion, it was my responsibility to understand the industry and competitors, and analyze the opportunities to create a better experience.
Skills applied
Industry and user research, user flows, sketches, wireframes, high fidelity prototypes, feedback, testing, collaboration with business, engineering, and marketing.
Problem
Background
They are traditionally used by a public company's C-suite and any other stock holders who have inside information about the company. These people are not allowed to trade impulsively because they have access to inside information. This is what is referred to as insider trading, which is an illegal activity punishable by the SEC. Instead, insiders must use a trading plan approved by the brokerage before they are allowed to trade any shares. Because taxes are complicated and hard to navigate, it is often difficult for non tax experts to decide how to structure their plan to avoid paying high taxes. The traditional solution is to hire a financial advisor to help them create a trading plan, which can cost a lot of money.
Opportunity
Carta could automate calculations and minimize taxes according to each person's unique tax situation. Doing so would remove the need for a costly financial advisor. This would also open the use of trading plans to regular employees, who don't normally have enough money to hire a financial advisor. Automating trading plans will fundamentally change the way people thinking about liquidating equity, from impulsive trading to life planning.
Research
Structure
A company insider may only draft and submit a trading plan during an open window, or non-blackout period. Once it is submitted and approved, there is a "cooling off period" of 30 days before the plan is allowed to start selling shares. This ensures that insiders cannot immediately act on inside information to gain an unfair price advantage. Every employee has the right to choose which shares they want to trade and when they want to trade them.
Long term capital gains
Capital gains tax is important to everyone who holds shares. In essence, if a stakeholder holds onto shares for long enough before selling, they will end up paying taxes at the lower longer term capital gains tax rates instead of the high short term capital gains tax rate. Tax treatment is based on when the shares were granted and acquired, both things that Carta has in their system.
Old User Journey
The financial advisor (FA) has a clear understanding of equity taxes. They make their money by helping non-tax experts dodge taxes. FAs tend to charge a lot, taking a cut from executives. Insiders with average salaries are generally unable to afford such a service, leaving them to navigate the tax labyrinth themselves.
Carta User Journey
Taxes can and should be calculated and optimized by a computer. At the heart of the problem is a common goal shared by all employees. How to get the biggest bang for your buck, and deciding when you need it.
To make trading plans accessible to all employees, not just executives and insiders, it must be simple and relatable enough. When people think of money, they think of purchases. When they think of big purchases, they think about a timeframe of when they need the money. No one should have to be a tax expert for something that can be calculated. We removed the focus on taxes by having them enter a goal of how much cash they need and by what date.
Example scenario
"My family has been talking about buying a home for the longest time, but we don't have nearly enough cash to make the down payment. I do remember that the company gave me shares as part of my compensation, but I don't know how much it's worth, or when I can cash out."
User Flow
Result
We launched trading plans as a beta product with a medium sized customer using it. For testing purposes, we limited it to company insiders to maintain volume control. Our first users were delighted by the fact that a trading plan could even be created without a financial advisor.
Not only did no other brokerage ever provide automated trading plans in the history of public stock trading, but Carta could easily open up this tool for anyone outside of the C-suite population, specifically to serve employees who do not have pockets deep enough to afford a financial advisor.
Trading Plans
Overview
