Client Background
The client is an executive at a Fortune 500 company whose compensation was largely driven by company stock options. Over time, this resulted in a substantial investment portfolio that was heavily concentrated in a single publicly traded stock. While the position had performed well, the lack of diversification created meaningful exposure should the company’s performance ever decline.
The Challenge
Selling a concentrated stock position would trigger capital gains taxes, but maintaining the position posed significant concentration risk. In addition, the client’s portfolio lacked exposure to real estate and dependable income-producing assets—an increasing concern as she began planning for future required minimum distributions (RMDs).
The Strategy
We recommended a structured approach to gradually reduce the concentrated stock position over the course of the year while market conditions were favorable. The proceeds were reinvested into a diversified mix of alternative investment funds, including real estate-focused strategies designed to generate income and improve overall portfolio balance.
The Outcome
By reallocating capital into multiple alternative funds, the client significantly reduced concentration risk and achieved broader diversification across asset classes. The new investments added real estate exposure that had previously been absent from her portfolio, beyond her primary residence.
In addition, the income generated by these investments is positioned to help offset future cash flow needs, reducing reliance on traditional portfolio withdrawals as RMDs approach.
The Result
The client transitioned from a concentrated equity position to a more balanced, diversified portfolio—gaining confidence, improved risk management, and a clearer long-term income strategy.
Key Takeaway
Strategically reallocating concentrated stock positions into diversified alternative investments can reduce capital gains exposure while improving portfolio balance and long-term income planning.