My company went public and I now have a lot of stock. How do I set myself up for success?

For those with a large position in a publicly-traded company, it’s rarely straightforward to simply diversify. What if the stock appears to have much better prospects for growth than the market? What if there are complex tax implications for selling the stock? What if selling the stock creates a perception problem with company employees or the public? The list goes on.

We have worked with many business executives and entrepreneurs to translate their large holdings of public stock into a diversified portfolio that mitigates risk, reduces tax, and helps achieve personal goals like buying a home, saving for retirement, or establishing a durable legacy plan. We also help them build additional tailored strategies around corporate communications, family dynamics, and philanthropic goals.

The key to our approach is engaging on both a practical and emotional level. We may “know” we should diversify, but we still don’t do it. Why is that? Oftentimes, it can be beneficial to explore the interplay of our financial wealth and our deeply-held values and aspirations in order to achieve clarity and harmony with an integrated financial-life plan.

In the end, we know we’ve done our job when our client feels comfortable with their present arrangements and excited for what the future holds.

Here is a partial selection of key questions we often weigh with our clients:

1. What is your outlook for the company? Would you buy the same company stock today if you were given $1 million in cash?

2. What do you think the company is worth? What does the market think the company is worth? Where are there differences and are they realistic?

3. At what price would you sell some of the stock? At what price would you sell all? How low would you be willing to let it go? Would you want to buy more at a certain price?

4. Does the fluctuation in net worth affect you emotionally and financially? Your family? Your banker?

5. What is the ultimate purpose for your financial wealth? How does the company stock play a part in that?

Are you a holder of concentrated financial wealth? Whether your company is listed in the public capital markets or privately held, it’s always the right time to get clear on your goals and make a prudent plan to realistically accomplish them.