Concentrated stock positions remain a significant planning challenge for RIAs in 2026. Founder shares, executive compensation, inherited stock and post-IPO holdings can leave a single company representing a large share of a client’s wealth. 

The difficult part is deciding how and when to reduce the position without creating an unnecessary tax bill or giving up too much potential upside.

When Should a Single Stock Position Be Considered Concentrated?

There is no universal threshold, but a position representing roughly 10% to 15% or more of investable assets is commonly treated as a material single-name exposure. The risk becomes more significant as the stock represents a larger percentage of total net worth.

For a client whose wealth is heavily tied to one company, an immediate liquidation may not be the best answer. A staged sell-down can gradually move the portfolio toward a target allocation while giving the advisor time to manage taxes, cash needs and market conditions.

The decision also depends on the client’s cost basis. Selling highly appreciated shares may generate a substantial tax liability, while holding them indefinitely leaves the client exposed to the same company risk. 

How Should RIAs Calculate the Tax Impact Before Selling?

Tax should be modeled before a diversification strategy is selected. Federal long-term capital gains tax can reach 20%, while the 3.8% net investment income tax and state taxes can increase the combined burden further.

That makes the timing of sales important. Rather than realizing the entire gain in one year, an advisor can model different selling schedules and determine how much stock can be sold each year while staying within the client’s broader tax strategy.

Other rules can change the calculation. Qualified small business stock may provide a significant exclusion of eligible gains when the relevant requirements are satisfied. Net unrealized appreciation can also create different tax treatment when employer stock is held inside a qualified retirement plan.

What Strategies Can Reduce Concentration Without an Immediate Full Sale?

A multi-year sell-down is only one option. Depending on the client’s circumstances, RIAs can also consider direct indexing, exchange funds and hedging strategies.

Direct indexing can provide opportunities to harvest losses elsewhere in a taxable portfolio, potentially helping offset gains from concentrated-stock sales. Exchange funds can allow investors to exchange concentrated securities for an interest in a diversified pool without immediately selling the original shares, although these structures generally involve eligibility requirements and multi-year holding periods.

Hedging can be useful when a client needs to retain the stock temporarily. Protective puts can establish downside protection, while collars combine puts and calls to create a defined range of outcomes. Prepaid variable forwards can provide liquidity against a concentrated position, but their complexity means they generally require specialized tax and legal review.

What Other Areas Can Help RIAs Deliver More Client Value?

Concentration planning is one example of why client value extends beyond portfolio returns. There are also financial opportunities that can be missed simply because they sit outside the traditional investment-management workflow.

Securities class action recovery is one of them. In 2025, securities class action settlements totaled approximately $8 billion. Platforms such as 11th.com automate settlement monitoring, holdings matching, claim filing, and payout delivery, giving RIAs another way to help eligible clients recover money connected to their investments. 

What Will Concentrated Stock Planning Look Like in 2026 and Beyond?

The direction of concentrated-stock planning is toward more coordinated, multi-year decisions rather than a single sell-or-hold recommendation. Tax projections, portfolio construction, estate planning, hedging, charitable strategies and insider trading requirements increasingly need to be considered together.

FAQ

When is a stock position considered concentrated?

A single holding above 10%–15% of investable assets is generally considered concentrated.

Should a client sell a concentrated position all at once?

Not necessarily. Staged sales can spread the tax impact over several years.

Can hedging replace diversification?

No. Hedging reduces risk temporarily but does not eliminate the concentration.

How can charitable giving help?

Donating appreciated shares can reduce concentration and provide tax benefits.

What does a 10b5-1 plan do?

It lets eligible insiders schedule stock sales in advance.