The Concentrated Stock Problem: Wealth Strategies for Executives with Equity Compensation

You have spent years building wealth through equity compensation such as stock options, RSUs, and possibly an employee stock purchase plan. On paper, it has worked. Your net worth has grown alongside your career, and company stock represents a meaningful portion of what you have accumulated.

But you may have also noticed something uncomfortable. A single earnings call, a missed guidance number, or an unexpected leadership change can move your net worth more than an entire year of disciplined saving.

That is the reality of concentrated stock positions, and it is a challenge that generic financial advice rarely addresses.

The Challenge Nobody Talks About

Most financial advice is written for typical investors. You are not typical.

You may have concentrated stock positions, complex tax implications, and vesting schedules that operate independently of market conditions. When RSUs vest during a stock decline, you may still owe taxes based on their value at vesting. When stock options approach expiration, decisions are often driven by deadlines rather than strategy.

When a large percentage of your net worth is tied to a single company, your financial future becomes connected to factors largely outside your control. These include competitive pressures, sector shifts, leadership changes, and unexpected headlines.

Generic advice often does not account for these realities, which is why many executives feel uncertain about their equity compensation even when their company is performing well.

The Real Risk Is Not the Market. It Is Concentration.

Many people think wealth preservation is about protecting against broad market downturns. For executives with significant equity compensation, the greater risk is often company-specific.

The market can rise while your company’s stock declines due to product delays, competitive disruption, or regulatory issues. Diversified investors may barely notice. Concentrated investors feel the impact directly in their net worth, retirement timeline, and financial confidence.

This is not about being pessimistic about your company. It is about recognizing that even strong companies experience volatility, and having a disproportionate amount of wealth tied to one stock introduces risk that can be managed.

At Daner Wealth Management, we have worked with executives through multiple market cycles and company-specific events. Our experience suggests that having a systematic approach in place may help clients navigate these situations with greater clarity.

Past experience does not guarantee future results.

A Framework for Executive Compensation

Concentrated Stock Risk Deserves Attention

You likely understand the risks of holding a large percentage of your portfolio in one stock. Many executives delay action because they believe in their company, want to avoid triggering taxes, or are waiting for a better time.

The challenge is that the perfect moment rarely arrives. Continued delay often means prolonged exposure to single-stock risk that may not align with long-term objectives.

Systematic diversification strategies, including 10b5-1 plans, allow concentration to be reduced on a predetermined schedule. This approach removes emotional decision-making and does not rely on short-term price movements.

Diversification does not ensure a profit or protect against loss.

Tax-Efficient Strategies That May Make a Difference

Tax planning around equity compensation is not about avoiding taxes. It is about managing when and how they are paid.

RSU vestings, stock option exercises, ESPP sales, and portfolio rebalancing all carry tax implications that can compound over time. Coordinated planning may help preserve more of what you earn.

We work alongside your CPA to support informed decision-making. We do not provide tax or legal advice, but we aim to ensure all professionals involved have a complete picture.

Retirement Planning That Accounts for Concentration

Most retirement projections assume diversified portfolios with relatively predictable behavior. That assumption often does not apply to executives with concentrated stock exposure.

What happens if your company’s stock declines significantly near retirement? Scenario modeling allows these questions to be explored before they become urgent.

Scenario modeling helps evaluate outcomes under various company-specific conditions while accounting for healthcare costs, Social Security timing, and employer benefits.

Projections are hypothetical and do not guarantee future results.

Why Compensation Models Matter

Compensation structures vary across the financial industry. Some advisors earn commissions or product-based compensation, which may introduce conflicts of interest.

As a fee-only fiduciary firm, Daner Wealth Management does not receive commissions. Our advisory fees range from 0.75 percent to 1.25 percent annually and are designed to align our interests with yours.

All conflicts of interest are disclosed in our Form ADV.

Questions We Discuss With Executives

How much concentration is too much
There is no universal threshold. We evaluate concentration based on your timeline, assets, risk tolerance, and financial goals.

Should I exercise stock options now or wait
The answer depends on tax considerations, concentration risk, and your broader financial plan.

How do I reduce concentration without triggering unnecessary tax
We explore systematic approaches that balance risk management and tax efficiency, including 10b5-1 plans and strategic timing.

What if I still believe in my company
Diversification is not a judgment on your employer. It is recognition that prudent planning typically avoids having income, career, and net worth tied to the same source.

Individual results vary based on personal circumstances.

The Value of Taking Action

Delaying action on concentrated stock positions means continued exposure to single-stock risk. RSU vestings without a coordinated tax approach may result in missed planning opportunities.

A wealth preservation plan does not eliminate uncertainty, but it may help you face it with greater confidence.

Marc Daner, CFP, ChFC, has spent more than 30 years working with executives using systematic, research-informed investment strategies rather than predictions or market timing.

Our firm operates with a small, experienced team. Clients work directly with senior professionals, and we coordinate with CPAs, attorneys, and benefits teams when appropriate.

Past experience does not guarantee future results. There is no guarantee that any strategy will achieve its objectives.

Starting the Conversation

Concentration risk does not resolve itself. The question is whether you will have a plan in place when volatility occurs.

To explore your options, contact Daner Wealth Management at 770-368-6033 or marc@danerwealth.com.

As a wealth advisor in Alpharetta, we work with corporate executives to address concentrated stock risk and support long-term wealth preservation.

Our Integrated Approach

Financial Planning
Customized planning addressing equity compensation, retirement timelines, and family goals.

Investment Management
Diversified portfolios using low-cost index funds and ETFs informed by academic research.

Retirement Planning
Scenario modeling, withdrawal strategy discussions, and benefit coordination.

Wealth Management
Strategies intended to support growth, protection, and wealth transfer.

Tax Coordination
Collaboration with tax advisors to support informed decisions.

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This content is for informational purposes only and should not be considered investment advice. All investing involves risk, including potential loss of principal.

Past performance does not guarantee future results. Diversification does not ensure a profit or protect against loss.

Hypothetical examples and scenario projections are illustrative only and do not predict future outcomes.

Tax and legal information is general in nature and is not intended as tax or legal advice. Please consult qualified professionals regarding your specific situation.

All conflicts of interest are disclosed in our Form ADV Part 2A, available upon request.

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