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What long-tenured employees should understand before they retire.* If you've spent a career at a company with a strong stock plan, you may have arrived at a familiar and double-edged place: a large share of your net worth sits in a single stock. It's a good problem in the sense that it usually means the stock did well. It's a real problem in the sense that your financial security is now riding on one company's fortunes — and often on a low-cost basis that makes selling feel expensive. We work with a lot of long-tenured employees from large employers, and this concentrated-position challenge comes up constantly. It's worth understanding clearly, because the instinct to "just leave it alone" and the instinct to "sell it all" are both usually wrong. **How people end up concentrated without noticing.** For many employees, company stock is the on-ramp to investing. Fidelity's 2026 research on stock-plan participants found that **43% of participants became first-time investors through their employer's stock plan**, and a majority said equity compensation makes them more likely to stay with their employer. (Source: Fidelity 2026 Stock Plan Participant Research.) That's a genuinely good thing — it turns employees into owners and investors. But it also means the position often grows year after year through grants, purchases, and appreciation, until one day it represents far more of your portfolio than you'd ever choose to put in a single stock if you were starting fresh. Concentration tends to happen *to* you, gradually, rather than as a decision you actively made. **The real risk isn't just volatility.** A single stock can swing far more than a diversified portfolio, but that's only part of the concern. The deeper issue for a pre-retiree is the **correlation between your paycheck and your future**. If a meaningful share of your retirement savings and your salary (and sometimes your pension) all depend on the same employer, a bad stretch for that one company can hit your income, your nest egg, and your sense of security at the same time. Diversification exists precisely to keep a single point of failure from taking down the whole plan. None of that means company stock is bad. It means a large, appreciated position deserves a deliberate strategy rather than benign neglect. **Why the tax bill keeps people frozen.** Here's the catch that keeps so many people stuck: selling to diversify can trigger a substantial capital-gains tax bill, especially on shares with a very low cost basis accumulated over many years. So people freeze. They know they're over-concentrated, but the tax cost of fixing it feels prohibitive, so they do nothing — and the position grows even larger. This is a solvable problem, and there are more tools for it than most people realize. The Wall Street Journal's Jason Zweig recently highlighted one that has gained traction: a strategy (sometimes called a 351 exchange) that lets an investor contribute a concentrated holding into a diversified ETF without triggering an immediate sale. It's one of several approaches — others include disciplined multi-year selling to spread gains across tax years, charitable strategies for the most-appreciated shares, and coordinating sales around lower-income years such as early retirement before Social Security and required distributions begin. *A quick but important note: these strategies are sophisticated, and none of them is right for everyone. The correct approach depends entirely on your cost basis, tax bracket, timeline, and goals — and should be coordinated with a qualified tax professional. This is education, not a recommendation.* **A framework, not a fire sale.** When we work through a concentrated position with a client, the conversation usually follows a sequence: - Start with the plan, not the stock. How much of your future actually needs to depend on this one company? That target — not a market view on the stock — drives the decision. - Quantify the tax cost honestly. Often, it's more manageable spread across several years than it looks as one lump sum. - Match the tool to the situation. Multi-year trimming, tax-aware exchange strategies, and charitable options all solve different versions of the problem. - Coordinate the timing. Retirement transitions often open low-income windows that make diversifying far more tax-efficient. **The bottom line.** Company stock that grew into a significant position is evidence that you did something right. Protecting it now is about making sure one company's future doesn't carry more of your retirement than you'd knowingly ask it to. The aim isn't to sell everything tomorrow — it's to move, deliberately and tax-efficiently, toward a portfolio that can weather a bad year in any single stock. *If a large share of your net worth sits in your employer's stock, when did you last map out a diversification strategy that accounts for the tax cost?* Securities offered through Independent Financial Group, LLC (IFG), a registered broker-dealer. Member FINRA/SIPC. Advisory services offered through Scarborough Capital Management, a federally registered investment adviser under the Investment Advisers Act of 1940. IFG and Scarborough Capital Management are unaffiliated entities. Registration as an investment adviser does not imply a certain level of skill or training. The information provided is general in nature and should not be considered investment, tax, or financial advice. 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