By David L. Dunn, CPA/PFS, CFP®, CPWA®

Many executives don’t become concentrated in company stock because they were careless. They become concentrated because they were successful.

Years of strong performance, promotions, RSU grants, stock options, ESPP participation, and loyalty to one organization can quietly create significant wealth. That’s a good problem to have, but it’s still a planning problem.

Company stock often represents more than an investment. It reflects sacrifice, confidence, relationships, late nights, leadership, and belief in the company’s future. Selling it can feel personal.

Still, the asset that helped build wealth can eventually become one of the largest risks to preserving it.

Many executives spend years diversifying their skills, responsibilities, and leadership experience. Yet their balance sheet becomes increasingly tied to one company.

That’s the hidden risk of success.

What Is the Real Risk of Too Much Company Stock?

Concentration risk occurs when too much of your financial life depends on one company.

The concern isn’t that the company is bad. The concern is that one company may now carry too much responsibility for your family’s future.

For executives, employer stock may overlap with salary, bonus, benefits, deferred compensation, career trajectory, and retirement planning. That creates a risk that’s larger than the stock price alone.

If the stock falls during the same period when bonus payouts are reduced, layoffs begin, or business conditions shift, the impact can be felt across multiple parts of the financial plan at once.

That’s the real issue. One company may be responsible for too many outcomes.

Why Does Success Create Concentration?

Success often compounds quietly.

RSUs vest. Options accumulate. ESPP shares are purchased. Stock appreciates. New grants arrive. Over time, what began as a compensation benefit can become a major portion of net worth.

The challenge is that accumulation often happens faster than planning.

An executive may have RSUs vesting in March, ESPP shares purchased in June, options approaching expiration in December, and a bonus arriving in the same tax year. Each event may look manageable alone. Together, they create a planning problem.

That doesn’t mean something has gone wrong. It means the planning question has changed.

At a certain point, the question shifts from “How do I keep building?” to “How do I protect what this career has already created?”

How Much Company Stock Is Too Much?

There’s no universal answer.

The better question is this: if the stock declined significantly, would your long-term goals still remain on track?

That question moves the conversation from percentages to consequences.

A concentrated position may be manageable for one family and dangerous for another. The answer depends on cash flow, tax exposure, retirement goals, risk tolerance, liquidity needs, and how much of the family’s future depends on one outcome.

A simple percentage target can be helpful, but it shouldn’t replace judgment. Concentration risk should be evaluated in context.

Why Is Selling So Emotionally Difficult?

Selling employer stock can feel surprisingly personal.

That reaction isn’t irrational. The shares often represent years of leadership, discipline, and belief in the company’s future.

Executives may hesitate because selling feels disloyal. It can feel like reducing confidence in colleagues, leadership, or the future of the business. In some cases, it may even feel like walking away from the very source of the family’s success.

Still, diversification isn’t a vote against the company.

It’s a vote for resilience.

An executive can remain proud of the company, optimistic about its future, and still decide that the family’s wealth deserves broader protection.

Why Shouldn’t Taxes Make the Decision Alone?

Taxes matter. They should be evaluated carefully.

Selling appreciated stock may create capital gains taxes, state tax exposure, Medicare surtaxes, or timing issues with other compensation events.

That said, avoiding taxes shouldn’t become the entire strategy.

A tax bill on appreciated stock usually means wealth was created. The planning objective isn’t to avoid every tax. The objective is to make coordinated decisions that balance tax efficiency, risk reduction, and long-term flexibility.

In some cases, it may make sense to sell gradually over multiple tax years. In others, charitable giving, donor-advised funds, or tax-loss harvesting may help improve the outcome.

The right answer depends on the full picture.

What Does a Better Diversification Strategy Look Like?

A thoughtful diversification plan doesn’t usually require selling everything at once.

A staged strategy may be more appropriate.

A practical framework may include:

• Measure the current concentration
• Map future RSU vesting and option expiration dates
• Review ESPP holding periods and tax treatment
• Coordinate sales with tax projections
• Consider charitable planning opportunities
• Build a staged sale plan tied to goals, not emotions
• Revisit the plan as compensation and markets change
  
  

The goal is not a dramatic decision. The goal is a disciplined one.

When a plan is built in advance, decisions become less emotional and more strategic.

How Does Coordination Improve the Outcome?

Company stock decisions rarely exist in isolation.

A sale may affect taxes. Taxes may affect cash flow. Cash flow may affect retirement timing. Retirement timing may affect charitable planning, estate planning, and investment strategy.

That’s why coordination matters.

Your CPA, financial advisor, and estate attorney should understand the full picture before major decisions are made.

A fragmented approach can turn a good strategy into a missed opportunity.

For example, a stock sale made without tax projections may create an avoidable tax surprise. A charitable gift made without reviewing basis may miss an opportunity. A retirement decision made without modeling future vesting may create unnecessary uncertainty.

Each decision touches the next.

The Bottom Line

The strategy that built wealth may not be the same strategy required to preserve it.

Many executives accumulate concentrated company stock through years of success. That success deserves respect. It also deserves a plan.

At a certain point, the goal is no longer just growth. It’s flexibility, resilience, and control.

Diversification isn’t about predicting the future. It’s about preparing for uncertainty.

Wealth built through one company can still support a life that isn’t dependent on one company.

The goal is not to make a dramatic decision. The goal is to make a coordinated one.

To learn more about how concentrated stock positions fit within a comprehensive wealth strategy, schedule a complimentary 30-minute consultation at www.daviddunn.com.

Disclosures

David Dunn Wealth LLC (DDW) is a member firm of The Fiduciary Alliance LLC which is a Securities and Exchange Commission-registered investment adviser. See full disclosure HERE.