You didn’t build wealth like this by thinking small. Maybe it was the company you helped lead through its public offering. The stock you received when you joined early and held through every market cycle. The equity that rewarded decades of commitment to a single organization. Whatever the origin, that position has become a cornerstone of your financial life—and in many ways, the proof of everything you worked for.
But here’s what that story doesn’t tell: for many high-net-worth individuals, a single stock has quietly become the largest unmanaged risk in their portfolio. When one position represents 20, 30 or even 50 percent of your investable assets, you’re no longer diversified. You’re concentrated. And the difference between those two words can define the trajectory of your wealth for decades.
The emotional math—and the real math
The challenge with a concentrated position isn’t usually knowledge. It’s conviction. You know the company. You’ve watched it navigate downturns and come back stronger. And you’ve been rewarded for that loyalty in ways that feel deeply personal. Selling, for many clients, doesn’t feel like a financial decision. It feels like a statement of doubt about something they helped build.
That emotional connection is understandable. It’s also one of the most common reasons that sophisticated, high-net-worth clients delay a decision that, rationally, they know needs to be made.
The real math is harder to ignore:
- A 50% decline in a stock representing 40% of your portfolio wipes out 20% of your total wealth—regardless of how well the rest of your holdings perform.
- Individual companies can and do permanently lose value, independent of broad market recoveries.
- Every year of inaction is another year of uncompensated, correlated risk sitting at the center of your financial life.
The goal isn’t to abandon the stock that made you. It’s to make sure it doesn’t unmake you.
A framework for thinking about diversification
The toolkit available to high-net worth clients has never been more sophisticated. The right strategy depends on your tax situation, timeline, liquidity needs, charitable intent and readiness to act. Your RBC Wealth Management financial advisor can help you quantify the cost and risk of your position compared with a diversified portfolio—so you’re deciding with clarity, not guessing.
Here’s how to think through your options:
Selling now or over time. A planned, staged exit—selling a portion each year to spread the capital gains tax impact—is often the most direct route to meaningful diversification. It takes discipline and a clear view of your situation, but it gets the job done.
Gaining liquidity without selling. Not ready to sell? Loans secured against your concentrated stock can unlock capital without triggering an immediate gain. Prepaid forward contracts let you monetize a portion of your position upfront while retaining some exposure to future appreciation.
Exchange funds. Contribute your concentrated stock to a pool of assets held by other investors and receive a diversified interest in return—without an immediate tax event. The result: real diversification, a deferred tax liability and an exit from single-stock risk on a timeline that can work for your situation.
Charitable strategies. A charitable remainder trust (CRT) lets you contribute appreciated stock, avoid immediate capital gains tax, receive an income stream for life or a specified term, and ultimately benefit a charity of your choosing. Direct gifts and donor-advised fund contributions of appreciated shares follow a similar logic. Your giving can work as hard as your wealth.
Wealth transfer. Gifting concentrated stock to family members in lower tax brackets—or placing shares into trust structures—can accomplish both estate planning and diversification goals at the same time.
Confidence begins with clarity
The most important thing to understand is this: doing nothing is also a choice—and one with real consequences.
The right strategy isn’t about timing the market or predicting what your stock will do next. It’s about building a plan that works regardless of what happens next—one designed to help keep your wealth diversified and working toward everything you’ve built it for.
Your RBC Wealth Management financial advisor has access to planning, quantitative, trading and derivatives expertise to evaluate these strategies against your complete financial picture. The conversation starts with one question: how much of your wealth are you comfortable having in one place?
Speak with your financial advisor today to review your concentrated stock position and explore the diversification strategies that fit your goals and timeline.
Read more in the Summer 2026 edition of the Investor's Edge >