Asset Allocation and Portfolio Development
A client owns a large position in the common stock of her employer. The stock has appreciated substantially and now represents nearly 60% of her investment portfolio.
What is the CFP® professional’s BEST recommendation?
- Continue holding the stock because selling would trigger capital gains tax.
- Increase purchases of the employer’s stock because of its strong historical performance.
- Develop a strategy to gradually diversify the position while considering the tax consequences.
- Sell the entire position immediately regardless of tax consequences.
