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Concentrated Equity Strategies

Neutralize the Risk

We often encounter clients who have too much wealth concentrated in one asset or, simply put - too many eggs in one basket. Often, the very asset that helped create significant wealth is the one that poses the biggest risk to their financial security.

Managing a concentrated equity position poses a myriad of complex issues, including taxes triggered by the sale of the stock, bullish sentiments on the stock's future or concerns about insider status in the case of company employees. At Objective Wealth Management, we are supported by a team of concentrated equity specialists who assist us in objectively assessing the pros and cons of carrying such a large position in your portfolio, and help us determine an appropriate strategy to mitigate its risks. The strategies we employ include, but are not limited to:

Hedging

A hedging strategy will allow you to retain the stock position and ownership rights through options and other types of derivative securities. This approach can help protect against down-side risk by allowing you to specify the amount of risk you're willing to accept.

Monetization

Monetization is a way of generating cash from a stock position. As an alternative to the outright sale of a concentrated position, there are other techniques that may be more appropriate from a tax-planning perspective.

Tax-Efficient Diversification

Diversifying a concentrated position can help you reduce your risk. While some diversification techniques may trigger immediate tax liabilities, there are some strategies that can be used to provide diversification in a tax-efficient manner.

Tax-Efficient Gifting

Some methods for reducing concentrated equity risk can also help you leave a long-standing, meaningful legacy. We can help you achieve your philanthropic or generational transfer goals while reducing your concentrated exposure and potential tax obligations.

Contact us to learn more about our dynamic solutions.