Resources · For Executives & Entrepreneurs

Managing a Concentrated Stock Position: A Guide for Executives

Q: How much of my portfolio in one stock is too much?

Many advisors consider a single stock position above roughly 10% of total investable assets to be concentrated, though the right threshold depends on your goals, timeline, other assets, and how closely the stock is tied to your income. There is no universal rule — the key question is whether a sharp decline in that one stock would change your family's plans.

Q: How can I sell company stock without a large tax bill?

Common approaches include selling in stages across multiple tax years, harvesting losses elsewhere in the portfolio to offset gains, donating appreciated shares to charity or a donor-advised fund, and in some cases using an exchange fund. Each has trade-offs, and the right mix depends on your cost basis, income, and goals.

Q: What is a 10b5-1 plan?

A 10b5-1 plan is a prearranged trading plan that allows corporate insiders to sell company stock on a predetermined schedule, helping them diversify while addressing insider-trading restrictions. Plans must be established when the insider does not possess material nonpublic information.

By Matthew James Holbrook, Financial Advisor · Updated July 2026

For many executives, entrepreneurs, and long-tenured employees, one stock quietly becomes the family's largest asset. Equity compensation vests, shares appreciate, options get exercised — and one day 40, 60, even 80 percent of your net worth is riding on a single ticker. The company may be excellent. The risk is still real: your salary, your bonus, your equity, and your career prospects are all tied to the same enterprise.

The challenge isn't recognizing the concentration. It's unwinding it thoughtfully — because a rushed sale can trigger an avoidable tax bill, run afoul of insider-trading rules, or simply feel like betting against the company you helped build. Below are the frameworks and strategies I discuss most often with clients in this position.

When does a position become "concentrated"?

There's no legal definition, but a common rule of thumb among advisors is that any single stock exceeding roughly 10% of your investable assets deserves deliberate attention. The more useful test is personal: if this stock fell 50% and stayed there for five years, would your retirement date, your children's education, or your lifestyle have to change? If the answer is yes, the position is large enough to plan around.

It's also worth counting your total exposure to the company — not just shares you hold outright, but unvested restricted stock, unexercised options, employee stock purchase plan holdings, and the present value of your future paychecks. Executives are often more concentrated than their brokerage statement suggests.

Why smart people hold on too long

Concentrated positions persist for understandable reasons. Capital gains taxes make selling feel expensive. Loyalty and inside knowledge create genuine conviction. And anchoring is powerful — after watching a stock triple, selling at today's price can feel like a loss even when it's a gain. None of these instincts is irrational, but none of them reduces risk. A useful reframe: the question is not "do I believe in this company?" but "if I received this position's value in cash today, would I buy this much of this one stock?" Almost no one says yes.

Strategies to consider

1. Staged, tax-aware diversification

The most common approach is simply selling in planned increments over several years. Spreading sales across tax years can keep you out of higher brackets, and pairing sales with tax-loss harvesting elsewhere in the portfolio can offset a portion of the gains. A written schedule also removes the temptation to time the market — the plan, not the news cycle, decides when you sell.

2. Rule 10b5-1 trading plans

If you're an officer, director, or otherwise have access to material nonpublic information, a 10b5-1 plan lets you diversify on a prearranged schedule while addressing insider-trading restrictions. Plans must be adopted during an open window when you hold no material nonpublic information, and recent SEC rules impose cooling-off periods before trading begins. Coordination between your advisor and your company's counsel is essential here.

3. Exchange funds

An exchange fund pools your concentrated shares with those of other investors, giving you a diversified basket without an immediate taxable sale. The trade-offs are meaningful — typically a seven-year holding period, limited liquidity, eligibility requirements, and fees — so these suit investors with low cost basis, long horizons, and no near-term need for the money.

4. Hedging and protective strategies

Options-based strategies such as protective puts or collars can limit downside on shares you can't or don't want to sell yet — for instance, during a lock-up period. These involve costs and complexity, may have tax consequences, and are often restricted for corporate insiders, so they warrant careful analysis before use.

5. Charitable strategies

If giving is already part of your plans, donating appreciated shares — directly to a charity or through a donor-advised fund — can be one of the most efficient ways to reduce a position. You may avoid the capital gain on donated shares and, if you itemize, receive a deduction, while the charity receives the full value. Charitable remainder trusts can extend this idea for larger positions, converting stock into a diversified income stream with a philanthropic legacy.

Putting it together

In practice, most plans combine several of these tools: a 10b5-1 schedule for ongoing vesting, staged sales calibrated to your tax picture, charitable gifts of the lowest-basis lots, and perhaps a hedge over a specific window of risk. The right combination depends on your cost basis, your role at the company, your cash-flow needs, and your family's goals — which is why this planning works best as part of a comprehensive wealth management strategy rather than a one-off transaction.

Frequently asked questions

How much of my portfolio in one stock is too much?

Many advisors treat anything above roughly 10% of investable assets as concentrated, but the honest answer depends on your goals, your other assets, and how tied the stock is to your income. The real test is whether a severe decline would force your plans to change.

How can I sell company stock without a large tax bill?

Selling in stages across tax years, harvesting offsetting losses, donating appreciated shares, and exchange funds are the most common levers. Each involves trade-offs that depend on your cost basis and income.

What is a 10b5-1 plan?

A prearranged trading plan that allows corporate insiders to sell on a set schedule while addressing insider-trading restrictions. It must be adopted when you hold no material nonpublic information.

Let's talk about your situation

Every concentrated position has its own history — a founding, an IPO, a career's worth of vesting. If a single stock has become the center of your balance sheet, a conversation is the right first step. Schedule a consultation or call (833) 740-1305.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual, nor is it intended as tax or legal advice. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. Consult your tax or legal professional regarding your specific situation.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through LPL Financial, a registered investment advisor.