Skip to main content Skip to footer Walkner Condon's team of financial advisors help customize your portfolio to account for your financial goals and market conditions while helping manage around your concentrated stock positions.
Our team is conveniently located across three offices in Madison, WI and serves clients throughout Dane County, Wisconsin and across the United States.
Whether it is from appreciated company stock, an inheritance, or just dogged determination to hold winners, highly concentrated stock positions offer unique challenges to portfolios. “Concentration risk” is the risk of significant financial loss that arises from having a large portion of your investment portfolio allocated to a single asset, asset class, or sector. This lack of diversification increases vulnerability to adverse events that impact that specific holding.
At Walkner Condon, we offer tailored strategies that balance your investment portfolio, considering risk tolerance and market conditions.
A concentrated stock position occurs when a significant portion of your investment portfolio is tied up in a single stock or company. This often happens due to equity compensation, inheritance, or long-term investment in a successful company. While it can lead to large gains, it also increases exposure to company-specific risk.
Holding too much of one stock creates concentration risk, which means your financial future depends heavily on the performance of a single company. If that company faces setbacks—like earnings misses, regulatory issues, or market downturns—you could experience outsized losses. Diversification helps reduce this risk by spreading investments across different assets.
There are several strategies to manage concentrated stock positions, including:
Each approach helps reduce risk, potentially minimize taxes, and align your portfolio with long-term goals.
Taxes play a major role in managing a concentrated stock position. Selling highly appreciated stock can trigger significant capital gains taxes, which vary based on how long you’ve held the stock and your income level. Smart strategies—like donating stock, tax-loss harvesting, or spreading sales over multiple years—can help manage your overall tax liability.
While not required, working with a fiduciary financial advisor can be extremely beneficial when managing a concentrated stock position. Advisors can help you develop a customized plan that addresses tax efficiency, risk management, and long-term investment goals. They also ensure your strategy aligns with your overall financial picture, including retirement planning, estate considerations, and charitable giving.
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