Managing your concentrated wealth

When the bulk of your wealth is tied to a concentrated stock position, whether you own a business or you work for a large public company, it’s important to think about how this affects your personal wealth and objectives.

Finding a balance between staying invested in your company or its stock and reaching your goals can be tricky. There are three things you should consider as you review your plan.

Get clear on your big picture: First and foremost, it is essential that you know what you want your wealth to accomplish. Is there a certain lifestyle you would like to maintain now and/or in retirement? Are you supporting family? Do you hope to pass wealth on to loved ones? Do you give regularly to charities? Different structures or strategies can help jump-start or fulfill such goals.
Think through your wealth options: What you can do with concentrated position may be shaped by how you received the shares or your relationship with the company that issued the shares. For example, if you’re a company insider, there may be restrictions on your selling. Or maybe the constraints are more emotional than legal—you may feel a sense of loyalty to your employer (public or private) and therefore an obligation to stay concentrated even when it isn’t required.
Evaluate your situation: You want to be sure to evaluate your current situation. Do you have liquidity needs or can you afford to keep the stock? How much do you need or want to use the funds for something else? Is there some other investment opportunity you would like to fund? Are you tax or cost sensitive?

Whatever your situation, we can help you understand your choices to enhance wealth diversification and find an approach that works for you.

For a business owner or corporate executive to build a smart, risk-managed, personal investment portfolio, they must take into account their core asset: their company.

Steve Faulkner, Head of Private Business Advisory