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Concentrated Stock

You built your wealth in one stock. You don't have to keep it all there.

Much of your net worth sits in your employer's stock, and selling feels like writing the IRS a check. We help you diversify on an agreed schedule, with the aim of spreading out and managing the tax cost.

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Rubric Advisors, a fee-only fiduciary in San Francisco, helps individuals and families whose net worth is concentrated in one company's stock diversify on a schedule agreed in advance. We set an annual tax budget, use tax-loss harvesting elsewhere in the portfolio to help offset gains, and coordinate the tax side with your CPA.

The problem

Why is a concentrated stock position risky?

Equity compensation works. RSUs vest, ESPP shares accumulate, options get exercised, and a few years later a large share of your net worth sits in a single ticker, often the same company that pays your salary.

Selling means realizing gains, sometimes large ones. So many people hold, telling themselves they'll sell at a target price or after the next vest. Holding is a decision too: it keeps your savings and your paycheck tied to the same company.

The cost of waiting

Individual stocks are far more volatile than diversified portfolios. Even large, well-known technology companies have seen their shares fall by half or more and take years to recover, and some never have.

When your job, your unvested equity, and your savings all depend on one company, a single bad year can hit all three at once. Diversifying does not guarantee a better outcome, but it reduces how much of your future rides on one company.

Advisor and client reviewing a financial plan together

Avoid these

What mistakes do people make with concentrated stock?

Waiting for a target price

A price target is a hope, not a plan. A stock can pass through your target on the way down as easily as on the way up.

Selling everything at once

One large sale can push most of the gain into a single tax year at the highest brackets, when spreading sales out may lower the total bill.

Diversifying into more of the same

Moving the proceeds into a broad index fund can quietly rebuild the same exposure, since many indexes are heavily weighted toward large technology companies.

How we help

Questions we often hear, and how we help

Concentrated stock is one of the issues we help individuals and families work through as part of managing their overall wealth. The goal is a plan you agree to in advance, so decisions follow the plan rather than the headlines. For clients whose assets we manage, this is part of our ongoing work.

Tax lock-in

If I sell, a big share goes to taxes. Is it better to just hold?

We look at the position lot by lot and set an annual tax budget with you, then use tax-loss harvesting in the diversified part of your portfolio to help offset gains. The goal is to reduce the position over time rather than in one large taxable sale; results depend on markets and your tax situation. We coordinate the tax side with your CPA.

No plan, just hope

I keep telling myself I'll sell at $X.

We agree on a sell schedule with you in advance: timing, amounts, and the tax budget for each year. Deciding ahead of time takes some of the emotion out of each individual sale.

Worry about a drop

What if it falls sharply before I diversify?

The most direct protection is diversifying sooner, so we can front-load the sale schedule within your tax budget. Where suitable, option strategies described in our Form ADV may be used to generate income on the shares you still hold, but the premium offsets only a small part of a decline, so you keep nearly all of the downside. Covered calls also cap potential gains, and an assignment can trigger the very tax you are trying to schedule. Options involve additional risks and are not suitable for all investors.

RSU tax surprises

Withholding was 22% and I still owed a lot in April.

The standard supplemental withholding rate on RSUs is often below your actual tax rate. We flag upcoming vests and work with your CPA on estimated payments and on how much of each vest to keep.

What to own instead

If I sell, won't I just end up in an index fund full of tech?

We build the rest of your portfolio around the position, excluding your employer and taking your existing sector exposure into account, so the new holdings help diversify what you already own.

Trading windows

I can only sell a few weeks a year.

If you are subject to blackout periods, we can help you think through a 10b5-1 trading plan and how it fits with your goals and portfolio. The plan itself is adopted by you, typically with a broker, under your company's insider-trading policy and SEC rules.

Our method

The Rubric Unwind

Our decisions are measured against an agreed rubric: tax, implementation costs, risk, and your goals. For a concentrated position, that rubric becomes five steps.

1
Map the position
Every lot, cost basis, holding period, and vesting date, so we know what selling each share would cost.
2
Set an annual tax budget
Agree with you, and your CPA, how much gain you are willing to realize each year.
3
Harvest losses
Use tax-loss harvesting in the diversified portfolio to help offset gains from the sales.
4
Use options where they fit
Where suitable, use option strategies described in our Form ADV on the shares you still hold.
5
Sell on an agreed schedule
Reduce the position on the schedule you signed off on, and revisit it as prices, tax law, and your life change.

Tax-loss harvesting benefits depend on market conditions and are not guaranteed; wash-sale rules apply. Options involve risk and are not suitable for all investors. Rubric Advisors does not prepare tax returns or provide legal advice; tax decisions are made with your CPA.

FAQ

Common questions

What counts as a concentrated stock position?

There is no single rule, but a common guideline is any one stock making up 10% or more of your investable assets. For many tech employees the figure is far higher once RSUs, ESPP shares, and vested options are added together.

My RSUs just vested. What should I think about?

RSUs are taxed as ordinary income when they vest, whether or not you sell. Keeping the shares afterward is economically similar to using that income to buy your employer's stock. Many people decide in advance how much of each vest to keep. Check your withholding too, since the standard supplemental rate is often lower than your actual tax rate.

Can I diversify without a big tax bill?

Often the tax cost can be spread out and partly offset, but rarely avoided entirely. Staging sales over several years, harvesting losses elsewhere in the portfolio, and giving appreciated shares to charity are common tools. The right mix depends on your situation, and we work through it with your CPA.

What is a collar?

A collar pairs selling a call option with buying a put option on shares you own. It limits losses below the put's strike price in exchange for giving up gains above the call's strike price. Collars have costs and risks, can trigger constructive-sale or straddle tax rules, and may not be appropriate for every investor. Review the tax implications of hedges with your CPA. Rubric uses options only where suitable and only strategies described in its Form ADV: writing covered calls, spreads, and uncovered options (uncovered writing carries potentially unlimited loss), and buying options, including protective puts and collars, to hedge existing positions (a hedge costs premium or caps gains, reduces but does not eliminate losses, and ends at expiration).

What is a 10b5-1 plan?

A 10b5-1 plan is a written trading plan, adopted when you are not in possession of material nonpublic information, that lets company insiders sell on a preset schedule, including during blackout periods. Plans are subject to SEC rules such as cooling-off periods, and are adopted by you, typically with a broker, subject to your company's insider-trading policy.

What is an exchange fund?

An exchange fund lets you contribute concentrated stock to a pooled fund in exchange for an interest in a more diversified portfolio, generally deferring the tax on the gain. Exchange funds typically require holding for about seven years, have eligibility requirements, and carry fees and limited liquidity.

Do I have to sell everything?

No. Many people keep some stock in a company they believe in. The point is to decide deliberately how much of your net worth rides on one company, rather than letting the vesting schedule decide for you.

Get a clear plan for your company stock

Book a complimentary 30-minute call. Bring a rough sense of your position and vesting schedule, and we'll talk through where you stand and what an agreed plan could look like.

Talk to an Advisor

Not sure this is your situation? Find where to start or see our fees.

Guides for this situation

Managing a Concentrated Stock Position: Ways to Diversify and What Each Costs

Reducing a large single-stock position usually combines staged sales, 10b5-1 plans, exchanges, and gifts over several years, each with its own trade-offs.

Section 351 ETF Conversions: Exchanging Appreciated Stock for ETF Shares

A Section 351 exchange moves a diversified basket of appreciated securities into a newly launched ETF for its shares, deferring capital gains tax, though September 2026 IRS guidance treats some versions as taxable.

Concentrated Stock Hedging Strategies: Puts, Collars, Forwards, and Exchange Funds

Holders of a large single-stock position can hedge with puts or collars, use forwards or exchange funds, or sell in stages. Each trades cost against tax.

RSUs Explained: Vesting, Withholding, and Selling Decisions

An RSU is a promise to deliver company shares once vesting conditions are met. The value is taxed as wages at vesting, and withholding often falls short.

Selling RSUs After an IPO: Withholding, Lockups, and a Sell Plan

RSUs are taxed as wages when they vest; after an IPO, a written sell plan helps manage under-withholding, lockups, and concentration.

ESPP Strategy: Discounts, Holding Periods, and Taxes

An ESPP lets employees buy company stock at up to a 15% discount. Tax at sale depends on meeting the 2-year/1-year holding periods for §423 plans.

Exchange Funds: Diversifying Concentrated Stock Without Selling It

An exchange fund is a private partnership that pools appreciated stock, letting holders diversify while deferring capital gains, usually for about 7 years.

Equity Compensation Tax Strategy Checklist

ISOs, NSOs, RSUs, and ESPP shares are each taxed at different moments; knowing which you hold sets which tax planning choices you have.

Sources

This page is educational and is not personalized investment, tax, or legal advice. Rubric Advisors does not prepare tax returns or provide legal advice; tax and legal decisions are made with your CPA and attorney. Because our fee is based on the assets we manage, we have an incentive to recommend that you place more assets with us; see our Form CRS. Strategies described here are not suitable for every investor, involve risk, including possible loss of principal, and outcomes depend on your individual circumstances and market conditions.