January 02, 2025
Allworth financial advisor Allison Scoggin, CFP®, explains the risks of heavy stock concentration and provides practical strategies to reduce exposure, diversify, and protect your wealth.
When it comes to investing, I often hear clients say, “I’m doing great—my stock is up,” or “I’ve had this investment for years, and it’s worked for me so far.” And that’s fantastic—until it’s not. Holding a lot of stock in one company, even if it’s performed well, comes with risks that can quickly turn a strong financial position into a shaky one.
If you’ve accumulated a significant amount of company stock—whether it’s from your employer, a long-held investment, or inherited assets—it’s important to ask: Am I overexposed?
Let’s talk about what that means, why it’s risky, and how you can manage it.
Stock concentration happens when a significant portion of your wealth is tied up in a single company’s stock. Maybe it’s your employer’s stock, shares you’ve inherited, or a favorite company you’ve held for years.
For example:
It might feel like a good thing. The company is thriving, and the stock is performing well. But here’s the catch: when too much of your wealth is tied to one investment, you’re taking on more risk than you may realize.
The good news? You have options to reduce risk while still honoring the role this stock has played in building your wealth. Here are steps to consider:
I often tell clients, “It’s great to celebrate the success of a single stock, but let’s not let it take over your financial life.” Managing stock concentration isn’t about making drastic changes overnight; it’s about creating balance, reducing risk, and ensuring your financial plan works for you—no matter what happens in the markets.
If you’re holding a significant amount of stock and aren’t sure how to manage it, let’s talk. Together, we can create a plan to protect what you’ve built, reduce your risk, and set you up for long-term success.
After all, the goal isn’t just to grow your wealth—it’s to keep it safe.
No matter what changes may happen in life, I believe it’s possible to refocus any situation in a way that helps to create positive change. That is why I love being a financial advisor and helping my clients listen to their inner voice and change their outcomes for the better.
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The information presented is for educational purposes only and is not intended to be a comprehensive analysis of the topics discussed. It should not be interpreted as personalized investment advice or relied upon as such.
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