Financial Solutions for Concentrated Positions

Customized Portfolio Structuring Including Concentrated Positions

There are many tax consequences that can arise from the sale of large concentrated stock positions, therefore before entering any transactions, an overall financial review and tax planning proposal is designed for client review, once agreed upon - step by step execution of trades occurs. A timeframe for diversification is allotted, and predictably the concentrated position is unwound and reinvested into a fully diversified portfolio. The portfolio will include an appropriate mixture of different asset classes that reduces the client's overall risk while insuring their required rate of return.

"Leverage Ratio" Sales Structuring - We utilize the leverage ratio when creating our structured sales plan for our clients. Leverage is created when you have a small amount of "your money", or the after-tax proceeds of a sale, controlling a larger amount of concentrated stock. The leverage ratio is the current market value of the stock divided by the after-tax cash from stock sale to reinvest. The order in which to diversify relies on the amount of cash one gets from a sale of the stock compared to the stock's value, taking tax considerations into mind. We focus on keeping the high leverage holdings and protecting their value, and at the same time selling the low-leveraged ones.

Tax Harvesting Asset-Allocated Portfolios - Every concentrated position has its own unique characteristics when it comes to tax harvesting. Utilizing structured products, derivative protection, and calculated ordered sales allows us to maximize tax harvesting and make a noticeable contribution to client's wealth over time. By executing calculated sales of the concentrated position and tax-efficient management of a diversified portfolio, we offset capital gains with capital losses and effectively put more after-tax dollars in your pocket instead of the tax man's.