For many executives in tech, biotech, and other industries, the realization that employer stock has become most of their household's investable assets tends to arrive as a surprise — and usually not all at once. It often surfaces during tax prep, when reviewing a financial statement, or when something else in life requires use of that money. By that point, a position that started as a modest RSU award has quietly grown into the dominant feature of the portfolio.
This happens in part because of how people are conditioned early in their careers. When stock grants are small, they don't demand much attention. A vesting, a sale here and there — easy. Then comes a promotion or two, and suddenly employer stock grants are meaningfully larger. Eventually, RSU awards may start to rival — or greatly exceed — the cash component of total compensation. The habits formed when the position was small, though, often persist long after the position isn't.
This is when the planning question changes. It's no longer just about whether the stock is a good investment. It's about whether one company should have such a significant influence over your portfolio, and when — or if — you can use that stock to fund the financial priorities that matter most to you.
How Much Employer Stock Is OK To Hold?
At meaningfully high concentration levels — say 20 to 30 percent of your investments — employer stock is an influential part of your portfolio. Influential in the sense that if the company had a bad year, your portfolio likely did too. But when it climbs to 50 percent or more, it stops being just a large holding. It effectively becomes the portfolio.
Most people don't arrive here through bad decisions. Instead, they arrive here through no decision in particular. RSUs, once vested, tend to get treated the way people treat a savings or checking account: money comes in periodically, some goes out when needed, and the rest sits. That is fine for a savings account. But consider what employer stock actually is: a position you can only access during a brief trading window roughly once a quarter, subject to meaningful swings in value — for company-specific reasons, or for macro reasons entirely unrelated to the company.
If someone suggested that you fund your living expenses and personal goals through a brokerage account holding a single company's stock, with only brief periods of liquidity — most people would find that arrangement somewhere between uncomfortable and highly stressful. Very few would choose it deliberately. But that is, functionally, what a large unmanaged RSU position becomes over time.
Concentration Is The Result of Inaction, Forced Action Is The Consequence
Concentration at this level is rarely the result of a decision. It accumulates — through RSU vestings, stock appreciation, and the absence of taking regular action during trading windows. Most people don't set out to put half their investable assets into a single stock. Eventually, something draws their attention, such as a large purchase for which they need cash, or a large change in stock price, and they realize that's where things stand.
The pattern is consistent: people most often find themselves here precisely because, until now, things have gone reasonably well. When the stock is performing and no obvious pain has emerged, there's no felt urgency to act. But not acting when conditions are favorable tends to produce one of two outcomes: selling when the price is not good because circumstances require it, or delaying financial plans because the stock price isn't currently where it needs to be. Neither is inevitable — and both are avoidable with a more proactive approach.
The Emotional Hurdle of Selling
Reducing concentration isn't just a financial decision — it's an emotional one. Selling a large portion of what has become the portfolio's dominant position can feel daunting, not necessarily because it should, but because the position's size makes any action feel consequential.
The difficulty of a financial decision also scales with its size. Decisions related to a large position can become time-consuming or feel paralyzing — and the attempt to get it perfectly right in a single move tends to make that worse, not better.
A more workable approach is to stop thinking of it as one large decision and start treating it as a series of smaller ones. Every quarter, when a trading window opens, there is a discrete and manageable question: sell, or not — and if so, how much, and where does that money go? That last part matters as much as the first. Proceeds that aren't needed for immediate expenses need to be considered in the context of your overall investment strategy. Which means the question of what to do with employer stock and the question of how to invest the rest of your money are really the same question — and that's what makes this an ongoing planning conversation rather than a one-time transaction.
Pro-Tip: During several points in time each year, it will likely look like an attractive (and unattractive) time to sell your company stock. These may or may not coincide with your trading window, which is why regular attention here is warranted.
What Employer Stock Is, What It Isn't, and What to Do Differently
RSUs and other equity awards serve two purposes from the employer's perspective. The vesting schedule is a retention mechanism — a financial incentive to stay. And paying compensation in company stock rather than cash gives the employer additional financial flexibility. Neither of those objectives was designed with the specific purpose of, or meant to encourage, building a concentrated investment position.
Portfolio diversification is something most people are familiar with in the abstract. It often comes across as an academic concept — something you're supposed to do, without a strong sense of why it matters in practice. And sometimes, for a period of time, a concentrated position that has performed well can make diversification feel unnecessary.
The practical version is more concrete: no single position should dominate the results of your portfolio, and any position that is limited to only brief periods of liquidity probably shouldn't be a large one. When both conditions apply at once — as they do with a large employer stock position — it stops functioning as an asset and instead begins functioning as a constraint on your financial life.
Pro-Tip: Here is a simple exercise to consider if, and to what extent, employer stock has taken control of your financial life. Remove employer stock from your household balance sheet entirely and look at what remains. If what remains is insufficient to support your household's financial goals independently, your ability to reach those goals depends on the outcome of a single stock. This is often the moment when people recognize that something needs to change.
This isn't a situation that gets resolved with a single decision. It is an ongoing process that requires consistent attention at every trading window — a deliberate, informed choice about whether to sell, how much, and where the proceeds fit within your overall investment strategy. Knowing what you're putting money into matters as much as knowing what you're getting out of. That's why managing employer stock thoughtfully means thinking about all of your investments together, not just the concentrated position on its own.
If you'd like to talk through what that looks like in practice, you can schedule an intro call here:
Common Questions
What are the risks of having too much employer stock in my portfolio?
The core risk is practical. Employer stock is only available to sell during brief, defined trading windows — and when those windows are open, the price you encounter may reflect recent company developments or broader economic conditions that have nothing to do with your company specifically. Over time, a growing position creates an additional layer of friction: the embedded tax liability on unrealized gains can make selling feel costly even when the price is attractive. The result is a pattern where people tend to hold when conditions look good, assuming they'll continue, and feel pressure to sell when conditions are poor — often with the same assumption that this, too, will continue. The position ends up driving the decisions rather than the other way around.
How do I reduce a large concentrated stock position without triggering a huge tax bill?
The most useful reframe here is away from a single transaction and toward consistent, quarterly action. Every trading window is an opportunity to make a deliberate decision: sell a portion, or not — and if so, with a clear sense of where those proceeds belong within your broader investment picture. Consistent action over multiple quarters and years tends to produce meaningfully better outcomes than waiting for a moment that feels exactly right, which rarely arrives on a convenient schedule. The tax consideration is real and worth accounting for, but it belongs inside a broader investment framework — not as a reason to defer action indefinitely. That's the work of ongoing financial planning.
At what point does employer stock concentration become a financial planning problem?
Here’s a simple starting point: if you would be uncomfortable putting this much money into any other single stock, you have too much. For most people, the upper limit on exposure to a single stock, by choice, is usually about 5-10% of their money, and that’s not small. From there, the problem tends to develop in stages. The first is inaction during periods when nothing has gone wrong — no obvious pain, no urgency, no reason to look closely. The second is when avoiding taxable gains is not a part of, but the primary factor in deciding when to sell: the tax consequence of selling becomes visible, and people often find themselves waiting for a better moment that doesn't come, or acting only when circumstances give them no choice. The third stage — and the most consequential — is when the movement in your stock price starts to determine what you can and can't do in your life, and when.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, business owners, physicians, and those seeking financial planning services.