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Company Stock: What Is A Concentrated Stock Position?

Many corporate and tech employees accumulate a great deal of employer stock via Restricted Stock Units (RSU), Incentive Stock Options (ISO), Non-Qualified Stock Options (NSO) and Employer Stock Purchase Plans (ESPP). At what point does your ownership of company stock turn into a concentrated stock position? More, what are the risks and rewards inherent in owning a concentrated stock position?

In this episode of Coffee, Sweaters, and Finance!, Morgan Ranstrom, CFA, CFP®, a financial planner at Trailhead Planners and Bill Mulvahill, CFP®, CPA, a financial planner at Essential Wealth, discuss the ins and outs of company stock, concentrated stock risk, and diversification. 

Questions that come up: 

  • What is concentrated stock? 
  • How does an individual come to own a concentrated stock position?
  • How does company stock impact your financial plan?
  • What are the risks inherent in owning a concentrated stock position?
  • What are the opportunities inherent in owning a concentrated position in company stock?
  • What's the number #1 thing to consider when you have a concentrated stock position?

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