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Diversification Strategies for Corporate Executives with Concentrated Stock

Updated: Nov 28

As a corporate executive, you may have a significant portion of your wealth tied up in your company’s stock. While it’s great to have confidence in your employer, having too much of your portfolio concentrated in one stock can be risky. In this blog, we’ll explore the importance of comprehensive financial planning concerning concentrated stock and discuss strategies that can help mitigate these risks.

The Risks of Concentrated Stock – Concentrated stock refers to a situation where a large portion of your investment portfolio is invested in one stock, often your employer’s stock. This situation can arise when your employer offers equity compensation, such as stock options or restricted stock units, as part of your compensation package.  While having a significant stake in your employer’s stock can provide a sense of loyalty and pride, it can also be risky. If the stock performs poorly, your entire portfolio can take a significant hit, jeopardizing your financial goals. Additionally, having a concentrated stock position can limit your diversification opportunities, making it challenging to achieve a balanced portfolio. Diversification is a key principle of investing that helps spread risk across multiple assets, lowering the impact of any one asset’s poor performance.

Comprehensive Financial Planning Strategies – To mitigate the risks of concentrated stock, comprehensive financial planning is crucial. A well-thought-out financial plan can help you achieve your financial goals while managing the risks associated with your concentrated stock position.

Here are some strategies to consider:

  1. Portfolio Rebalancing – Rebalancing your portfolio involves selling over-weighted investments and buying under-weighted ones to restore your portfolio’s balance. This can help you maintain a diversified portfolio and reduce your exposure to any one asset.

  2. Selling Vested Equity Positions – If you have significant equity positions vested, it may be wise to consider selling some of the shares and diversifying your portfolio. This can help reduce the risk of your portfolio being too heavily concentrated in one stock.

  3. Tax-Efficient Strategies – When selling equity positions, it’s essential to consider the tax implications of the sale. A financial planner can help you develop tax-efficient strategies that can minimize the tax impact of selling your equity positions.

  4. Hedging Strategies – Hedging is a strategy that involves taking a position in a financial instrument that is inversely correlated with your concentrated stock position. This can help mitigate the risk of your concentrated stock position without selling it outright.

In Conclusion

Concentrated stock can be a double-edged sword, providing potential financial gains, but also exposing you to significant risks. At Centurion Wealth, we help clients build a comprehensive financial plan. Your plan will include diversification and risk management strategies that help you achieve your financial goals while minimizing the risks associated with your concentrated stock position.








Portfolio diversification does not ensure a profit or guarantee against a loss. Investments in securities and other instruments involve risk and will not always be profitable. Investors should consider their investment objectives, risks, and the charges and expenses of an investment strategy before making an investment decision.



Investment advisory services offered through Centurion Wealth Management, LLC, a federally registered investment adviser. Securities offered through Spire Securities, LLC, a registered broker/dealer and member FINRA/SIPC.


This material is distributed for informational or educational purposes only and should not be considered a recommendation of any strategy or investment product, or as investing advice of any kind. The views and opinions expressed here are of the author and do not necessarily reflect the opinion of Centurion Wealth Management, LLC . There can be no assurance that any investment product or strategy will achieve its investment objectives.  There are risks associated with investing, including the entire loss of principal invested.  Past performance is no guarantee of future results.

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