FEATURED ISHARES ETFS
Models & SMAs
Models & SMAs
CLIENT RESOURCES
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.
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
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.
Ready to take the next step?
Want to speak to a specialist? Contact us by calling 1-800-ASK-BLK or send us an email at GroupOptionStrategists@blackrock.com
If you are a financial advisor, create an account or log in to Advisor Center to explore BlackRock’s solutions.
Additional Resource
>Boom or Bust? Managing Expectations for Concentrated Positions and Risk
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Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal or volatility of returns. Actual investment outcomes may vary. Stock and bond values fluctuate in price so the value of your investment can go down depending upon market conditions. Two significant risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. There may be less information available on the financial condition of issuers of municipal securities than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. A portion of the income may be taxable. Some investors may be subject to Alternative Minimum Tax (AMT). Capital gains distributions, if any, are taxable. Municipal securities may not be suitable for all investors. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve profits. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. You should consult your tax or legal advisor regarding such matters. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
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