Concentrated Stock Portfolios
Reduce risk, diversify wisely, and protect your future
Having a significant portion of your wealth tied to a single stock is more common than you might think — and riskier than it may feel. RSUs, IPOs, inherited shares, or a long-held position can quietly become your greatest financial vulnerability. We provide fiduciary guidance to help you understand your true level of risk, avoid costly tax mistakes, and thoughtfully diversify your portfolio on your terms and your timeline.
Managing the risk that comes with concentrated stock
Every situation is different, but these are some strategies worth knowing before you decide how to move forward:
Protective Collars & Options Overlays
Use call and put options to limit downside while preserving upside potential. These strategies can often be implemented in a tax-deferred or brokerage account. It's a way to hold the position without holding all the risk. Also, explore margin alternatives with box spreads.*
Tax Smart Diversification
Avoid unnecessary tax burdens by creating a gradual liquidation plan using tax-loss harvesting, standard deduction thresholds, and customized 10b5‑1 plans. The goal is to reduce your position on your timeline, not the IRS's.
Direct Indexing & Custom SMA
Build diversified portfolios with embedded tax optimization. This allows you to shift exposure away from a single stock while maintaining desired market factors. Over time, the portfolio quietly does the diversification work for you.
Exchange Funds
Pool your shares with other investors to defer gains and receive a diversified basket—ideal for highly appreciated holdings. A useful option when selling outright would create a tax bill that outweighs the benefit.*
Charitable Trusts
Reduce concentrated risk while meeting philanthropic goals and gaining income tax deductions. For shareholders who were already planning to give, this turns a tax problem into a legacy decision.
*Options strategies, including protective collars and overlays, involve risks and costs that should be carefully considered. These may include the cost of options premiums, potential limitations on upside gains, complexity, and liquidity constraints. Exchange funds involve long lock-up periods, liquidity restrictions, market risk, potential tracking error, and fees. These strategies are not appropriate for all investors and may not be available in all account types. Results will vary based on individual circumstances. This is not a recommendation to buy or sell any security. Please consult with your advisor to determine whether any strategy is appropriate for your situation.
