The case for staged diversification of a concentrated position.

For founders and long-tenured executives, a single stock often represents most of their net worth. It is also, statistically, the largest risk to it: a meaningful share of individual stocks significantly underperform the broad market over long periods, and many never recover from a major drawdown.

The challenge is rarely analytical. Most clients understand the risk. What holds them back is the tax bill, an emotional connection to the company, or the fear of selling just before the stock rises further.

Building the schedule

We start by defining a target concentration — the share of net worth the family is comfortable keeping in the position — and a timeline to reach it. Sales are then scheduled in tranches, often through a 10b5-1 plan for insiders, so that decisions are made once, deliberately, rather than every quarter under pressure.

Tools that work alongside the plan

• Exchange funds to diversify a portion of the position without triggering immediate gains.
• Charitable remainder trusts for families with philanthropic goals and long horizons.
• Option collars to protect against a sharp decline while the sale plan runs.
• Gifting of low-basis shares to trusts or family members, coordinated with the estate plan.

Managing regret

We tell every client the same thing: the stock will almost certainly rise after some of your sales. That is not a sign the plan has failed. The goal is not to sell at the top — it is to ensure that the family's long-term security no longer depends on a single company's fortunes.