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Let's talk about concentrations. You all likely have a story about a client who was adamantly opposed to diversifying a significant concentrated position. Here's one that comes to mind for me. A CFO of a public company had several forms of employer stock and wasn't willing to sell until the stock hit a specific price target. She and her husband were focused on their plan to retire in three years. This plan largely hinged on the performance of her company's stock. They saw the concentrated position as a safety net rather than a risk. Sound familiar?

Here's a framework to drive the conversation forward. Celebrate. Ask. Remind.

First, celebrate their success. This concentrated position may very well be the reason for their wealth. Second, ask. Are you open to discussing how the holding fits into your overall financial plan? Third, remind them. Not all shares of employer stock are created equal, especially from a tax perspective.

Reflecting back on the highly concentrated CFO and her husband, this framework would likely have driven a more successful outcome.

Celebrate. Ask. Remind.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.