What to Do with Concentrated Company Stock

Jacob Vanator

Many professionals in Michigan build wealth by working for a single employer for decades. Whether you’ve earned stock through an employee purchase plan, restricted stock units, or options, having too much of your net worth tied to one company creates concentrated stock risk. While it may feel rewarding to see your shares grow, it also exposes you to unnecessary volatility if the company underperforms.

 

Why Concentrated Stock Is Risky

If your employer’s stock makes up more than 10–15% of your total portfolio, you could be at risk of large losses. A drop in your company’s share price can impact not just your portfolio, but your job security too. For residents in Eaton Rapids, Lansing, or Jackson, where many families have worked at GM, Consumers Energy, or local hospitals, this double exposure is a real concern.

 

Staged Diversification Strategies

The good news is that you don’t have to sell everything at once. A staged approach lets you reduce exposure gradually while managing taxes. By selling shares over several years, you spread out capital gains and minimize bracket creep.

Another option is donating highly appreciated shares directly to charity. This can eliminate capital gains taxes and provide a charitable deduction—an approach many Michigan families use to support local organizations while improving their financial plan.

 

Risk Limits You Can Follow

To stay disciplined, many advisors recommend setting clear limits.

  • Keep company stock to no more than 10% of your total portfolio
  • Revisit annually or when shares rise sharply
  • Use proceeds to build a more diversified portfolio

This method ensures your wealth grows without being overly tied to one employer.

 

Protecting Family Wealth

When concentrated stock represents a large legacy asset, careful planning matters. Strategies such as gifting shares to children, transferring stock into trusts, or using life insurance can help preserve wealth. This is where estate coordination comes in—ensuring your stock doesn’t just serve you but also benefits future generations.

 

Bringing It All Together

At Vanator Financial Services, we guide clients through these decisions, blending tax-smart sales, charitable options, and diversification into a plan that reduces risk while growing wealth.

 

If concentrated stock risk is keeping you up at night, now is the time to create a plan. We’ve helped families in Eaton County and across mid-Michigan design strategies to reduce risk and build stability.

 

Contact us to schedule a stock diversification review.