Feeling Stuck With a Concentrated Stock Position?

You’ve built something remarkable. Years of focus, long hours, and smart choices have paid off — not just in promotions, but in equity. That company stock now makes up a meaningful part of your net worth.

And yet, what once felt like a reward can start to feel like a trap.

Maybe you’ve told yourself you’ll sell when the price rebounds, after the next earnings report, or when the market “feels right.” But let’s be honest — is a vibe check really the strategy you want to hang your future on? Diversifying isn’t about walking away from what you’ve built  — it’s about reducing risk and creating flexibility so your wealth can support what comes next.

The risk of inaction

A concentrated position can feel like proof of your success. But concentration also magnifies volatility. When the stock rises, your net worth soars; when it falls, it can sink just as fast. Even if you understand the risk, emotion often takes over. Waiting feels safer — until it doesn’t.

The cost of doing nothing can quietly outweigh the cost of taking action. You may miss other opportunities, live with more volatility than you’re comfortable with, or face a heavier bill later as gains continue to compound.

Four tax-aware strategies to get unstuck

When you tie up too much wealth in a single stock, the goal isn’t to sell everything overnight. The goal is to create a thoughtful, tax-efficient plan that balances opportunity, risk, and emotion. Here are four ways to start working toward freeing up your wealth.

1. Net Unrealized Appreciation (NUA)

If you hold company stock inside your 401(k), an NUA strategy may offer meaningful tax advantages. It allows you to move that stock into a brokerage account and pay ordinary income tax only on its cost basis — not the entire value. This can result in future appreciation taxed at lower long-term capital gains rates.

Hypothetical example. Your shares have a cost basis of $100,000 and a current value of $500,000. With an NUA strategy, you would pay ordinary income tax on just the $100,000 now, while the $400,000 could be taxed at the capital gains rate when sold. Over time, that difference can represent significant savings.

It’s a strategy that requires planning and coordination, but when executed correctly, it can help you diversify while managing taxes effectively.

2. Tax-loss harvesting

If you’ve held other investments that have declined in value, those losses can offset gains from selling part of your concentrated position. By harvesting losses elsewhere in your portfolio, you may be able to trim your exposure without dramatically increasing your tax bill.

The key is to treat harvesting as a dynamic, ongoing process — not a one-time event. This allows you to make gradual progress toward diversification while keeping your tax liability in check.

3. Long/short strategies

Hedging tools — such as long/short funds — may provide flexibility when you’re ready to reduce risk but not ready to sell. These strategies allow you to maintain exposure to your concentrated position while offsetting some of its volatility.

For instance, using a long/short approach (like those offered by AQR and others) might help you harvest tax losses or dampen downside swings without forcing a sale. It’s not a substitute for diversification, but it can serve as a bridge — buying you time to execute a well-planned transition.

4. Systematic trimming

Sometimes the simplest approach is also the most effective. By committing to sell a fixed percentage of your position each year — say, 20% — you remove emotion from the equation and spread out the tax impact.

This steady, rules-based method helps ensure you take action even when market noise tempts you to wait. It’s about consistency over perfection… progress over paralysis.

The human side of diversification

Money is never just math. That concentrated position might represent years of loyalty, innovation, and identity. For many, selling feels like closing a chapter of their career — or betraying the company that helped them succeed.

That’s why diversification requires both strategy and empathy. It’s not only about numbers; it’s about aligning your decisions with your values and vision for the future.

A good advisor recognizes that an emotional connection is important and helps you make space for it — while also helping your financial plan to reflect your goals and risk tolerance.

It’s perfectly normal to feel hesitant. The key is to act with structure, not impulse. Small, deliberate steps can preserve your sense of control while protecting what you’ve built.

The freedom to move forward

The perfect time to diversify doesn’t exist. Markets shift, stock prices fluctuate, and analysis can turn into paralysis. But the longer you wait, the more you risk letting one stock dictate your future.

The right plan can help you exhale — knowing your wealth is no longer tied to a single outcome, but aligned with the life you’re building beyond it.

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.