By Bruce Brumberg,Considering What You,Contributor

Copyright forbes

When you have equity comp and believe in your company, it can be tricky to find a balance between holding company stock for wealth creation and selling some of it to diversify and safeguard your life goals.

One constant I have observed in my 25 years as the editor-in-chief of myStockOptions.com is that employees, executives, and startup founders love their company stock and its prospects. It’s an emotional bond. However, when you have equity compensation—such as stock options or restricted stock units (RSUs)—it is all too easy to accumulate a risky concentration of your net worth in just that single stock of your company.

Loyalty to your company stock may lure you into holding a big chunk of it even when doing so is not in your financial best interest. While concentrated stock positions can create life-altering wealth, they can also work against your life goals if the stock price suddenly plummets.

A recent webinar that I moderated featured a talk by an experienced financial advisor who coaches clients in the tradeoffs of risk versus reward with equity comp: Ally Jane (AJ) Ayers, the co-founder of Brooklyn FI in New York City. In addition to her advisory practice, she is the author of a forthcoming book called Creative Money: New Financial Rules For Artists, Innovators, And Misfits, to be published by Penguin Random House in 2026.

Below are five planning tips Ayers made during the webinar that can help you better handle what she aptly terms “the rollercoaster of equity compensation.” They go beyond technical knowledge of taxes on equity comp to consider how to work with your emotional attachments to company stock in a way that also lets you diversify to mitigate risk and safeguard your life goals. Of course, for guidance on your specific situation you should consult your own financial advisor.

1. Seeking A ‘Scenario Of Least Regret’ To Manage Emotions In Financial Planning

One key planning framework that Ayers applies seeks to smooth out the emotional ups and downs that can arise when making decisions about equity comp and company stock. This framework, which she calls the “Scenario Of Least Regret,” presents a little-by-little approach that can balance the competing interests of ambition and anxiety.

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With stock options, one of the most complex planning tasks is figuring out when to exercise the options and how many to exercise. Watching the stock price fluctuate can be mesmerizing. When is the optimal point to pull the trigger on your exercise and sale? What if you exercise too soon? What if you exercise too late? What if you exercise too many or too few?

When a client has the potential for life-changing wealth with stock options, anxiety can paralyze their willingness to act, Ayers observes. It can feel safer to defer the decision.

While Ayers cautions that sometimes doing nothing is actually best, she frequently advises that clients should at least do something. “You don’t have to exercise everything,” Ayers often says, “but don’t exercise nothing.”

For example, you may be convinced that your company’s stock is eventually “going to the moon,” so you’re stubbornly inclined to wait on exercising any options. In that case, Ayers may still recommend exercising a small number of options now. “Let’s exercise 5%,” she gives as an example. If you do nothing, you could potentially miss out should the stock price fall closer to (or even below) your exercise price. Exercising in small portions and selling the stock is a concrete step toward recognizing at least some gains.

“That’s what we mean by least regret,” she explains. “Let’s take a little bit of action so you don’t feel that you really missed out and your long-term wealth was damaged.”

2. Dealing With FOMO (Fear Of Missing Out)

Turning to the topic of concentration risk, Ayers observes that many of her clients cling to a risky concentrated stock position because they fear missing out on a future skyrocketing of the stock price. Similar to the prior advice, Ayers often recommends inching out of the concentrated company position by selling in small portions. For example, “sell 5% every quarter or 20% every six months—whatever you’re comfortable with.”

The concept Ayers applies here is called dollar-cost averaging: in this case, selling the same number of shares or the same dollar value of the stock at regular intervals over a certain period, regardless of the stock price. “In a situation where we have to take action and sell a concentrated position, dollar-cost averaging can be a great way to slowly do so over time.”

Ayers is quick to reassure her clients that this balanced approach is not giving up on the stock. “Selling a slice doesn’t mean leaving the game, it means shifting chips to a broader table so you stay in the market. You’re not cashing out. You’re reinvesting, just spreading the bet so your future doesn’t ride on one company.”

3. Reframing Overconfidence By Considering What You Have To Lose

“Another thing we see is overconfidence,” Ayers continued. You may want to “ride or die” with a concentrated stock position because you deeply believe in the company. As an employee, you may know special information about the company’s prospects that leads you to believe its stock is currently undervalued and will take off in the future.

The risk-mitigating approach Ayers suggests here is to focus not on the stock price but on your financial goals. “Well, what if the stock price drops by 50%? How would that impact your goals?”

What this achieves, she points out, is to reframe your thinking out of tunnel vision on the stock price. It reminds you of the things you actually want to accomplish in your life with your stock wealth.

Consider what you have to lose by maintaining the risky position, she advises. If the stock price falls by 50% or more, or even becomes worthless, the things you want—buying a house, funding children’s college education, retiring early—may suddenly become harder, farther away, or simply impossible.

“I know you believe in this company,” Ayers tells clients in this situation. “By diversifying, you’re not walking away—you’re making sure you benefit no matter what happens. If the stock doubles, great, but wouldn’t it be even better if your overall portfolio doubled without the rollercoaster and risk?”

4. Overcoming Inertia

Planning for equity compensation and holdings of company stock is complex. It can therefore feel overwhelming, with too many choices. It is all too easy to procrastinate or languish in denial about the need to make a financial plan, warns Ayers. “This is the most common thing I see with clients,” she says.

Her recommendation here is to form a plan with an advisor just one stage at a time. “Let’s just take one little step today,” she counsels. “It doesn’t have to be the next 16 actions. It can be just what you’re doing this quarter or next quarter.” As Ayers points out, with your approval the advisor will often take those actions for you.

“We’re not asking you to sell everything,” she often reassures clients. “Let’s just take one step and reinvest part of it into something stable that grows with the market. Think of this as planting new seeds. You’re still farming, just in more than one field.”

5. Using A ‘Legacy Anchor Position’ To Provide Psychological Safety

Another planning angle that Ayers favors is to focus on what percentage of company stock a client wants to keep, e.g. 5%-20% of their original holdings. She refers to this as the client’s “legacy anchor position.” Ayers will then work with the client to build a diversification and trading plan around keeping that percentage.

This approach gives you a way to feel comfortable that you’re still committed to your company even as you sell some of your company shares to diversify your overall investment portfolio. The legacy anchor position that you define is enough to maintain a sense of loyalty to the company and a connection to its upside, as you mitigate risk to safeguard your financial and life goals.

Further Resources

The webinar in which AJ Ayers (and some of her colleagues) spoke is available on demand at the myStockOptions Webinar Channel: Strategies For Concentrated Stock Wealth And How To Get Your Client (Or Yourself) To Act.

The website myStockOptions.com has abundant general resources on financial planning with equity compensation and company shares, including the issues that arise with diversification out of a concentrated stock position.

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