We get this question often from clients who work at great companies, whose stock performance has been extremely strong. Some of our clients have built significant wealth by holding onto their employer stock. As Warren Buffett likes to say, “It’s not a bad thing to keep the tax man away from your pocket for as long as possible.”
So, should you sell your employer stock? The answer–as you might expect–is: it depends. Here's how we help clients think through it.
When It Makes Sense to Hold On
If your employer’s stock is doing well, and it fits into your broader financial plan, there’s no immediate reason to sell just because you “should.” Some clients are very tuned in to their company's performance, their management, and their direction—and that matters.
We’re not in the business of overcomplicating something that’s already working. If the stock is performing and the rest of the plan checks out, we keep holding. That said, we always stay mindful of risk, especially when someone has a concentrated position.
When You Might Start Diversifying
This isn’t about pushing a button and selling everything at once. We’ll often talk with clients about taking a slow, methodical approach—maybe selling a few hundred shares each year, depending on what they own.
Here’s how we usually frame it:
- We want less dependence on one company as you near and enter retirement.
- Spread the capital gains to avoid tax headaches.
- Use appreciated stock to give to charity—it’s a great asset to donate.
- Or, if a parent is in a lower tax bracket and needs financial support, transfer some shares their way. They can sell without paying gains, and now they’ve got money to live on.
It’s all about what works best for you—and being smart about it.
Appreciated Employer Stock Can Be a Tool
Appreciated stock can be used in a lot of creative ways beyond personal lifestyle, just like any income:
- Give it to charity
- Gift it to family members
- Use it to support aging parents
- Hold it as part of your long-term legacy
We’ve even helped clients transfer appreciated stock to parents who are in a low or zero tax bracket. They sell it, don’t pay any capital gains, and now they’ve got money for the year. That’s the kind of strategic thinking we want to encourage. Also, because we work so closely with our clients—and often their whole families—we’re able to craft solutions that are better fit to your own life.
Final Note
There isn’t necessarily a perfect rule of thumb other than to make the decision that appears to support your personal financial plan the best. The key is being intentional and knowing your plan.
If you’re sitting on a big decision and wondering what to do, here’s our advice: let’s talk through it. We’ll look at the full picture, not just the stock itself, and we’ll figure out the right approach for you, not some one-size-fits-all answer.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Any economic forecasts set forth may not develop as predicted and are subject to change. Stock investing includes risks, including fluctuating prices and loss of principal.