Insights + News + Advice

Insights + News + Advice

client success story

Senior executive needs to diversify away from a concentrated equity position

Over the past 20 years, Megan has risen the ranks at a Fortune 500 company. During this time, a large percentage of her total compensation came in the form of stock options and grants. As a result, her company stock represented a large portion of Megan’s and her husband’s total net worth. When the couple wanted to use the stock to fund building their dream home, they asked for our helping in doing this in the most tax-efficient way possible.

Untangling a complex, concentrated position

Although Megan was confident in the future of the company, she realized that being so concentrated, not just in a single industry but in a single company, was a risky proposition. Also, because she had accumulated the stock through a combination of non-qualified stock options, qualified stock options, and restricted stock grants, her holdings presented a very complicated picture in terms of taxes.

Building a dream home with tax-efficient liquidity

Now that their children are out of the house and beginning their careers, Megan and her husband decided to build their dream home. The couple was also interested in diversifying their wealth across industries and asset classes.

With these goals in mind, we worked with Megan to develop a strategy that would generate liquidity to pay for the construction of the house and build a more diversified portfolio while minimizing the tax implications of these transactions. An important element of this strategy was writing covered calls against the company stock that she owned. We tailored this approach to the couple’s specific liquidity and timing needs and then executed the strategy.

Starting children on a path to financial success

Megan and her husband were also focused on preparing their children for their own financial journeys. We created trusts that would provide the appropriate level of financial support to the children and educated them about how the trusts work. We also helped the children set up Roth IRAs to start their retirement savings.

The opinions voiced are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by LPL. To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. LPL does not provide tax or legal advice.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Diversification does not protect against risk; it is a method used to help manage portfolio volatility.

Contact Us

Request A MeetingMeet An Advisor

Please select service interest*:


* Denotes a required field.

Thank you.

Your submission has been received. We'll be in touch.