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Strategies to manage your client's concentrated stock

Whether a client has inherited a stock position, earned stock as part of their compensation, or simply purchased a stock that has rocketed in value over time, they can end up with an unexpected problem – holding too much of one stock in their portfolio.

Risks: Boom or Bust

While the market has posted sizable gains for 35 years, individual stocks experienced a wild and unpredictable ride. Owning too much of one company exposes the client to both company and market risk. If the company becomes insolvent or an industry shake-up or bear market occurs, the loss can be devastating for the client’s portfolio.
concentrated stock risk

How do you solve this problem for your client?

Many clients feel like they have a binary choice, to hold or sell the concentrated position. However, liquidating is not the only alternative, and to determine the right solution, an advisor must take into account many client-specific variables.

You should consider the client’s tax budget, their attachment to the stock, and overall investment goals to develop a well-thought-out strategy.

Concentrated stock strategies

Blackrock now offers access to solutions that can help manage concentrated stock.

1) Tax-efficiently reduce the amount of stock held over time
2) De-risk the portfolio without selling the stock
3) Generate income to pay the tax bill

Learn how we manage concentrated stock

BlackRock offers many solutions to help advisors protect their clients from the wide range of market risks and investment-specific, idiosyncratic risks that impact stocks.

To hear about possible solutions, watch this video from Eve Cout, Managing Director at BlackRock.