It's a familiar story among successful professionals. Years of stock grants, option exercises, and employee purchase plans have quietly turned a single company's shares into the largest asset on your balance sheet. The stock has been good to you. You know the business inside and out. And whenever you think about selling, something stops you.
Online forums for tech workers and executives are full of people asking the same thing: "I know I'm too concentrated, but I just can't bring myself to sell. What should I do?" The hesitation is understandable, and it's worth unpacking.
Why Selling Feels So Hard
Several well-documented behavioral tendencies are at work:
- The endowment effect. We tend to value things more simply because we own them. Shares you've held for years can feel more valuable than an equivalent amount in anything else.
- Familiarity bias. You see the company's strategy, products, and people up close. That familiarity can feel like an informational edge, even though the market already reflects much of what employees know and you can't see risks that haven't surfaced yet.
- Loyalty and identity. Selling can feel like a vote of no confidence in your colleagues or your own work.
- Anchoring to a peak. If the stock has been higher, it's tempting to wait until it "gets back" to that level before selling.
- Tax aversion. Low-basis shares can come with a sizable capital gains bill, and few people enjoy writing that check.
The Risk That's Hard to See
The challenge with concentration is that it doubles up on exposure. Your salary, bonus, future equity grants, and often your professional network are already tied to the same company. If that business hits a rough patch, both your income and your net worth could be affected at the same time.
History offers plenty of examples of well-regarded companies whose shares declined sharply and stayed down for years. No one inside those companies expected it either.
Diversification doesn't guarantee better results, but it can reduce the chance that a single company's fortunes dictate your family's financial future.
Reframing the Decision
A few questions can help move from paralysis to a plan:
"If I had this amount in cash today, would I invest all of it in this one stock?" If the answer is no, holding it is effectively making that same choice every day.
"What would a meaningful decline do to my goals?" Running scenarios can make the abstract risk concrete. Seeing that a sharp drop might delay retirement or reduce what you can leave to family often clarifies priorities.
"Do I need to decide all at once?" Usually, the answer is no. Diversifying doesn't have to be a single, dramatic sale.
Approaches Investors Commonly Consider
Every situation is different, and the right approach depends on your tax picture, trading restrictions, and goals. Strategies people often discuss with their advisors and tax professionals include:
- A systematic selling schedule, spreading sales across months or years to manage tax impact and reduce timing regret.
- Pre-arranged trading plans for insiders who are subject to blackout windows.
- Selling newly vested shares rather than letting them accumulate.
- Charitable giving with appreciated shares, which may offer tax advantages for those already planning to give.
- Gifting strategies as part of a broader estate plan.
Each of these comes with its own considerations, complexities, and risks, and should be coordinated with qualified tax and legal professionals.
Talking It Through With Family
For many executives, decisions about company stock affect more than just their own portfolio. A spouse may have strong feelings about the risk, and adult children may one day inherit whatever remains. Including family members in the conversation, at an appropriate level, can bring valuable perspective and reduce the sense that you're carrying the decision alone. It can also make it easier to stick with a diversification schedule once it's in place, since others understand the reasoning behind it.
The Takeaway
Feeling attached to the stock that helped build your wealth is natural. But the goal now may be different from the goal that got you here: preserving what you've earned and aligning it with what you want your life to look like.
If a single position makes up a large share of your net worth, we'd be glad to help you evaluate the risks and build a thoughtful, gradual plan in coordination with your tax advisor.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. All investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. LPL Financial and its representatives do not provide tax or legal advice; please consult a qualified tax or legal professional regarding your specific situation.