Diversifying Concentrated Wealth

Case Study

Client: Joe, a successful manufacturing business owner in his early 50s, was a big-picture thinker, focused intensely on growing his company. While highly successful, he realized his personal wealth had become significantly concentrated, with over 50% of his liquid net worth tied to a single technology company stock. He understood the risk but, due to his demanding schedule, hadn’t found the time to address it strategically. He needed help crafting  a clear plan without adding to his already overflowing plate.

The Challenge: Joe’s concentrated stock position presented a substantial risk to his overall financial security. A significant downturn in that one company could jeopardize a large portion of his wealth, impacting his retirement plans and legacy goals. He needed a sophisticated, tax-efficient strategy to diversify his portfolio without incurring massive immediate tax liabilities.

Our Approach: We acted as Joe’s strategic financial partner. We understood his time constraints and his need for decisive action. We implemented a sophisticated “collar position” strategy to immediately reduce the concentration risk while allowing for potential upside within a defined range. Crucially, we coordinated closely with his accountant to develop a gradual, long-term divesting schedule, emphasizing that diversification is a process, not an overnight event. This approach allowed us to create a highly tax-efficient way to sell off portions of his concentrated stock over time. The proceeds from these sales were then strategically used to fund future generations’ goals, such as down payments on homes or travel experiences, aligning his wealth management with his family values.

With this approach, Joe can gain significant peace of mind knowing his concentrated risk was being systematically addressed. We could implement a collaborative approach with his existing professionals and the ability to implement a complex solution on his behalf. With a diversified portfolio and a clear plan for the future, Joe could continue to focus on his business with the assurance that his personal wealth was protected and growing strategically.

*Case studies are for illustrative purposes only. This story is not a testimonial.  The information is presented to illustrate our experience and the types of clients we help.