A Good Problem – With Important Decisions
Whether you enjoy investing in local corporations like Idaho Power, Albertsons and Micron, or buying the next BIG trend, individual stock ownership can be a powerful contributor to our natural fear and greed reflexes.
Building substantial wealth through ownership in a single company is one of the greatest financial successes an individual can achieve. A concentrated stock position often reflects years of hard work, disciplined investing, or a successful career that may include stock incentives and awards. Yet the same concentration that creates extraordinary wealth also creates extraordinary risk, especially when the appreciation happens suddenly.
While significant appreciation can create substantial wealth, it can also create complex financial decisions. As your position grows, the questions become less about whether the stock will continue to rise and more about how that wealth fits into your overall financial plan.
The objective isn’t simply to maximize returns—it’s to make informed decisions that support your long-term goals.
Shift the Conversation
Many investors ask: “Should I hold or sell?” A more productive question is: “How can I balance future opportunity with protecting the wealth I’ve already created?”
That conversation extends well beyond investment performance. It also involves taxes, cash flow, retirement planning, estate planning, charitable giving, and portfolio diversification.
Four Questions Worth Discussing
1. How much of my financial future depends on this one company?
Consider your stock holdings alongside your salary, bonuses, deferred compensation, and future equity awards. Concentration risk is often greater than investors initially realize.
2. What am I trying to accomplish?
Your priorities may include:
- Preserving accumulated wealth
- Funding retirement
- Creating financial flexibility
- Supporting family or philanthropic goals
- Maintaining participation in future growth
Clear objectives should guide your decisions—not recent stock performance.
3. How comfortable am I with the risks?
Ask yourself: If this stock declined by 50% over the next year, would I still feel comfortable with the amount I own?
Your answer often reveals whether your current position reflects intentional planning or simply the result of appreciation over time.
4. What planning options should I explore?
There is rarely one “right” answer. Depending on your circumstances, your advisor may help you evaluate strategies such as:
- Gradual diversification
- Tax-efficient selling plans
- Hedging strategies
- Charitable giving opportunities
- Estate planning techniques
- Liquidity and lending solutions
Each approach involves different opportunities and trade-offs.
Questions to Bring to Your Next Advisor Meeting
Use these questions to help guide a conversation about your concentrated stock position:
☐ What percentage of my total net worth is concentrated in one company?
☐ How much of my future income also depends on this company?
☐ Has my investment outgrown the level of risk I’m comfortable taking?
☐ What tax considerations should influence my timing or strategy?
☐ Are there ways to diversify without making an all-or-nothing decision?
☐ How would a significant market decline affect my long-term financial goals?
☐ Are there charitable or estate planning strategies that could improve outcomes?
☐ If I continue holding the stock, what risks am I intentionally accepting?
The Value of Planning
No one can consistently predict where a stock will trade next year.
What investors can control is whether their financial decisions align with their long-term goals.
Periods of significant stock appreciation often create valuable planning opportunities. Reviewing your concentrated position with your financial advisor can help you evaluate potential strategies, understand tradeoffs, and make informed decisions based on your objectives, not simply the current market price.
A thoughtful conversation today can provide greater clarity and confidence, regardless of where the market goes next.
About the Author:
Stephen Schultz, CFP®, BFA™, CPFA®, NQPC™, CEPA™
PARTNER/CERTIFIED FINANCIAL PLANNER™ Professional
208.385.0739
208.696.6212 cell
steve@familytreefinancial.us
Stephen was inspired to help others with their financial goals from an early age. He saw how hard his parents worked to provide for their seven children (6 of them boys!), yet struggle to find financial peace. He took that desire to help families to his studies at The Ohio State University, where he earned a degree in Human Ecology with a specialization in Family Financial Planning and Behavioral Science.
Stephen has been in the financial services industry for over fifteen years, ten of them as a financial wholesaler in Southern California – consulting hundreds of financial advisors about retirement challenges and solutions. In 2016, wanting to have a direct impact on individual families’ financial success, Stephen transitioned to a financial advisor himself. He started his practice serving teachers, to whom he has a special place in his heart, coming from a family of teachers. He continues to have a passion for serving those that serve others. In 2018, together with his wife, Heather Genereux, he moved with his family to Idaho to start his own holistic financial services practice. Stephen helps their clients preserve and grow what is important to them, while educating clients on how to create their own financial roadmaps.
In their free time, Stephen and his family (including 5 kids themselves!) enjoy hiking, kayaking, camping, and everything outdoors that Idaho has to offer. Stephen loves every sport known to man, cooking (but not cleaning), and finding the next adventure. Family time is their favorite time and teaching is at the heart of everything they do!
- Financial Planning
- Investment Advising
- Retirement Planning
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