Concentration is almost never a decision. RSUs vest every quarter, options accumulate, an IPO turns paper into wealth, and one day you look up and half your net worth — sometimes far more — is one ticker. And it's not just any ticker: it's the same company that writes your paycheck. If it stumbles, your income and your portfolio take the hit together.
Every professional investor treats that as unacceptable risk. Many executives hold it for years. The difference isn't knowledge — it's that the executive's position comes wrapped in loyalty, taxes, and a memory of what the stock used to be worth. So people freeze.
Why smart people freeze
- The tax bill feels like a penalty. Selling appreciated shares triggers capital gains, and paying tax feels like losing. But the tax is owed eventually on any path — the only question is whether you also carried the risk the whole way there.
- Anchoring on the old high. "I'll sell when it gets back to…" is a sentence that has held more portfolios hostage than any market event. The stock doesn't know your cost basis, and it doesn't owe you the old price.
- Loyalty and optics. Selling can feel like betting against your own team. It isn't — it's separating your family's security from your employer's stock chart, which is exactly what your CFO does with the company's own risks.
- It kept working. The most dangerous reason. Concentration built the wealth, so concentration feels safe. But the strategy that builds wealth and the strategy that keeps it are different strategies, and the handoff between them is precisely what planning is for.
Diversification will feel wrong exactly as often as it protects you.
What an unwind actually looks like
The answer is rarely "sell everything today" — it's a written, multi-year schedule that takes the decision out of each individual day:
- Set the ceiling first. Decide the maximum share of net worth one company may represent. That number — not a price target, not a feeling — is what drives every sale.
- Sell on calendar, not on mood. Predetermined amounts on predetermined dates, coordinated with trading windows and vesting. Executives with insider constraints can formalize this in a pre-arranged trading plan.
- Spread the tax across years. A schedule lets each year's sales be sized against that year's brackets, losses, and deductions — turning one brutal tax year into several manageable ones.
- Give the shares you'd give anyway. Donating appreciated stock instead of cash removes the gain entirely while funding the same generosity — one of the few genuinely free lunches in the tax code.
- Coordinate the whole picture. Option exercises, upcoming vests, a spouse's income, a sabbatical year — each changes what the schedule should do next. This is a place where the advisor and the CPA genuinely need to be the same team.
The point of it all
The goal isn't to abandon the company you helped build. Keep a stake — deliberately sized, honestly labeled as the concentrated bet it is. The goal is that no single earnings call can rewrite your family's plans. Winning created this problem; a schedule solves it. The best time to write that schedule is before the next vest, not after the next surprise.
Educational only — not investment, tax, or legal advice. Every situation is different; the right answer depends on the numbers, and that's what the strategy session is for. Investing involves risk, including possible loss of principal.