What is a concentrated stock position?
A concentrated stock position is generally any single stock that makes up more than 5% of your total portfolio. It can be a cornerstone of your financial security, the result of years of success, a long career or an inheritance, but it also carries meaningful risk, as even a strong company faces events no one can predict. The goal isn't to abandon the position, but to develop a thoughtful transition strategy that balances holding for growth with protecting what you've earned. The strategies below are tools to help you diversify based on the purpose the stock serves in your life, your tax situation and your family's goals.
Strategies at a glance
Direct indexing
Direct indexing offers a sophisticated alternative to traditional index funds. Instead of buying a single fund, you hold the individual securities within an index directly in your own account.
Tax-considerate private investments
Tax-aware private investment solutions—such as certain long/short strategies—allow you to gain broad market exposure while consistently realizing tax losses that can offset capital gains elsewhere in your portfolio.
Exchange funds
An exchange fund allows you to diversify a concentrated position by exchanging your shares for an ownership interest in a diversified pool of stocks contributed by other high-net-worth investors, each contributing their own concentrated positions.
Dynasty trusts
A dynasty trust allows you to transfer significant wealth to your children, grandchildren and future generations while helping minimize estate taxes and maintaining family control over the assets for multiple generations. Combined with a comprehensive estate analysis, we can help estimate potential estate tax liability and structure a plan designed to minimize the impact on your heirs.
Spousal lifetime access trusts (SLATs)
A spousal lifetime access trust provides estate tax benefits while allowing your spouse access to trust funds if needed. Assets are removed from your taxable estate yet remain accessible to your spouse, offering both tax efficiency and a measure of flexibility and security.
Donor-advised funds
A donor-advised fund (DAF) allows you to contribute appreciated stock and receive an immediate tax deduction, then direct grants to the charities you choose over time. By contributing concentrated stock directly, you may avoid capital gains tax on the appreciated shares while supporting causes meaningful to your family.
Pooled income funds
A pooled income fund is a charitable giving vehicle that allows you to transfer appreciated assets into a fund in exchange for lifetime income and an immediate charitable tax deduction. You can avoid capital gains tax on the appreciated stock, receive steady income from a diversified portfolio and reduce your estate tax burden, all while supporting the charitable causes you care about.
Variable prepaid forward
A variable prepaid forward contract allows you to monetize a portion of your stock while deferring the tax liability owed on capital gains, giving you liquidity without triggering an immediate tax event. We can also implement option strategies, including covered write programs that generate income from your holdings and equity collar strategies that protect downside while maintaining upside potential. These approaches allow you to manage concentration risk while optimizing your overall portfolio.
Ready to build your strategy?
Every concentrated position is unique. The right combination of strategies depends on your goals, your tax situation and your family’s circumstances. Let’s talk about what makes sense for you.
