Stock Options and Concentrated Holdings

The Many Risks of Concentration

If your wealth is concentrated in one or only a few stocks, you may be exposed to unnecessary market risks, including volatility and illiquidity.  Concentrations can easily arise - through inheritance, employment with a single company, the accumulation of stock options, or the sale of a business for stock -  but it’s unwise to let them linger.

Individualized Solutions

Repositioning portfolios with concentrated positions must be done strategically, because outright sale can trigger significant tax liabilities.  Each strategy must be personalized, tailored to your specific risk tolerance, overall financial goals, tax situation, and time horizon. With stock option strategies, particular consideration must be given to tax consequences, including the Alternative Minimum Tax (AMT), as well as any regulatory restrictions.

Our Wide Range of Techniques

City National’s seasoned professionals are accustomed to developing and implementing strategies for concentrated portfolios to:

  • better manage your risk
  • respect your investment preferences
  • preserve your original portfolio objectives
  • factor in your tax and estate planning

We are comfortable collaborating with your existing tax and investment advisors, in exploring  proven techniques including hedging, charitable trusts, principal protection, scheduled diversification, and market-neutral strategies.

City National understands that wealth is difficult to accumulate – and to retain. If your wealth is concentrated, learning more about our strategies is highly recommended.

Getting Started

To learn more, call us at (800) 773-7100, Monday through Thursday, 6:00 a.m. to 5:30 p.m., and Friday, 6:00 a.m. to 6:00 p.m. (PT). You can also contact us online or visit one of our local City National locations.

Investment and Insurance products:
  • Are Not insured by the FDIC or any other federal government agency
  • Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
  • May Lose Value

City National, as a matter of policy, does not give tax, accounting, regulatory or legal advice. The effectiveness of the strategies presented in this document will depend on the unique characteristics of your situation and on a number of complex factors. Rules in the areas of law, tax and accounting are subject to change and open to varying interpretations. The strategies presented in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. The strategies were not written to support the promotion or marketing to another person any transaction or matter addressed. Before implementation, you should consult with your other advisors on the tax, accounting and legal implications of the proposed strategies based on your particular circumstances.