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Equity Compensation Part 3: Managing Concentrated Stock Risk

Doug Fabian

Senior Vice President

Duncan Wilk

Regional Vice President

August 10, 2020

Summary

Alongside the many financial benefits of receiving equity compensation, such as stock options, from your employer, having a high percentage of wealth in one investment can be risky. How can you tell when it’s time to diversify? What options should you consider?

We wrap up our three-part series on equity concentration with this episode featuring Duncan Wilk of Mercer Advisors, who joins host Doug Fabian to look at highly concentrated investment positions from a risk-vs.-reward perspective.

Hear their guidance on:

Recognizing when your investment portfolio might be over-concentrated in one area
“De-risking” a highly concentrated stock position or other type of investment
The benefits of tax-loss harvesting
Building a diversified portfolio around a large holding of one company’s stock
How charitable giving and estate planning considerations influence a highly concentrated position

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All investing involves risk, including the possible loss of principal. Portfolio management strategies such as diversification, asset allocation, and rebalancing do not ensure a profit or guarantee against loss. There is no guarantee that any investment strategy will achieve its objectives. Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning document preparation and other legal advice are provided through Advanced Services Law Group, Inc. Mercer Advisors Inc. is a Delaware corporation and is in no way affiliated with Mercer LLC, Mercer Investments, or the Marsh & McLennan Companies. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

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