If you're a corporate executive in Palm Beach with a significant chunk of your net worth tied up in company stock, you're facing a wealth concentration problem that most advisors won't handle properly. The difference? We operate under a legal fiduciary standard as a fee-only wealth management firm: meaning we're legally required to put your interests first, with zero commissions clouding our judgment. Unlike traditional brokers who earn commissions on product sales, our compensation comes solely from transparent advisory fees. This distinction matters enormously when you're dealing with complex Palm Beach corporate financial planning challenges like concentrated stock positions and tax-efficient portfolio transitions.
From our Stuart office: a strategic hub for Treasure Coast families extending to Jupiter Island, Palm Beach Gardens, and throughout Martin County: we've seen the same pattern repeatedly: successful executives accumulate employer stock through RSUs, ESPPs, and stock options, wake up one day, and realize 60-80% of their liquid net worth is in a single ticker symbol. That's not a diversified portfolio. That's a timebomb with a tax-detonation mechanism.
The Concentrated Stock Trap: Why Palm Beach Executives Stay Paralyzed
The math is brutal. You've built a $5 million position in your company's stock with a cost basis of $800,000. Selling triggers $4.2 million in capital gains. At combined federal and state rates (including the 3.8% Net Investment Income Tax), you're looking at roughly $1 million in immediate taxes. So you do nothing. You tell yourself the stock will keep climbing, or you'll "deal with it next year."
Meanwhile, your entire financial plan: retirement, legacy goals, your kids' education: rests on the performance of one company. If that stock drops 30% (and plenty do), you've just lost $1.5 million in wealth that could have been diversified, protected, and working harder elsewhere.
This is where concentrated stock position management becomes not just a nice-to-have, but a financial survival strategy.
The MILO Method: A Strategic Framework for Unwinding Positions
Research from leading wealth management firms has identified a structured approach called the MILO method: focusing on risk Management, tax reduction, and wealth preservation through a disciplined, multi-year strategy. Here's how it works in practice:
Step 1: Establish Your Capital Gains Budget
Think of this as your annual "tax tolerance" for realizing gains. If you're in the 20% long-term capital gains bracket, earning $600,000 annually, you need to be strategic about when and how much you sell. Crossing certain income thresholds triggers:
- The 3.8% Net Investment Income Tax (kicks in at $250,000 married filing jointly)
- Higher Medicare Part B and Part D premiums (IRMAA surcharges)
- Potential Alternative Minimum Tax exposure
- Loss of certain deductions and credits
A proper capital gains budget maps out 3-5 years of strategic selling, keeping you below these cliffs while systematically reducing concentration risk. For a Palm Beach executive with $5 million in concentrated stock, this might mean selling $800,000-$1 million annually over five years rather than triggering a single massive tax event.
Step 2: Layer in Tax-Loss Harvesting
As you're selling appreciated positions, you're simultaneously looking for losses elsewhere in your portfolio to offset gains. This is where tax-efficient SMAs for executives become powerful tools. Unlike mutual funds where you have no control over capital gains distributions, separately managed accounts (SMAs) hold individual securities in your name, giving you surgical precision for tax management.
SMAs vs. Mutual Funds: The Tax Efficiency Gap
| Feature | Mutual Funds | Separately Managed Accounts (SMAs) |
|---|---|---|
| Tax Control | No control; funds distribute gains to all shareholders | Full control; harvest losses when you choose |
| Customization | One-size-fits-all; can't exclude holdings | Customize to exclude your employer stock or specific sectors |
| Transparency | Holdings disclosed quarterly | Real-time visibility of every position |
| Capital Gains | Forced distributions can trigger taxes even in down years | You decide when to realize gains; no forced distributions |
| Cost Basis Management | Single average cost | Specific lot identification for optimal tax outcomes |
| Minimum Investment | Often $1,000-$5,000 | Typically $100,000-$250,000 |
For a Palm Beach executive transitioning from concentrated stock, the SMA structure means you can diversify into 50-100 individual securities while maintaining the ability to harvest losses against your concentrated position sales. This isn't theoretical: it's a tax-alpha strategy that can add 1-2% annually to after-tax returns.
The Geographic Advantage: Why Palm Beach Demands Specialized Planning
Florida's zero state income tax is a massive advantage, but it doesn't eliminate federal obligations. What we see with corporate executives relocating to Palm Beach Gardens, Jupiter Island, and throughout the Treasure Coast is an assumption that their tax planning is "handled" because they're Florida residents.
Not true.
Federal capital gains taxes still apply. The NIIT still applies. And if you've recently moved from a high-tax state like California, New York, or Illinois, there may be source-state tax traps on deferred compensation, RSU vesting schedules, and stock options granted while you were a resident there.
At Davies Wealth Management, we coordinate with CPAs familiar with multi-state taxation to ensure your concentrated stock management strategy accounts for these variables. Our Stuart office serves as a central planning hub where we integrate investment strategy, tax planning, and estate considerations: all under the fee-only fiduciary model.
Four Actionable Strategies for Palm Beach Executives
1. The Systematic Diversification Schedule
Create a written plan to sell X% of your concentrated position quarterly or annually. Automate it. Remove emotion. A rule like "sell 5% of my position each quarter regardless of price" forces discipline and typically results in dollar-cost-averaging out of the position at reasonable prices.
2. Exchange Funds for Tax Deferral
If your position is so large that even multi-year selling creates tax nightmares, exchange funds allow you to swap your concentrated stock for shares in a diversified partnership without triggering immediate capital gains. You're trading concentration risk for diversification while deferring the tax bill. These aren't suitable for everyone: they typically require seven-year lockups and $500,000+ minimums: but for the right situation, they're game-changers.
3. Charitable Remainder Trusts (CRTs)
Donate appreciated stock to a CRT, receive an immediate tax deduction, eliminate capital gains tax on the sale inside the trust, and receive income for life. The remainder goes to charity. For executives with philanthropic intent and concentrated positions, CRTs accomplish multiple goals simultaneously: diversification, income, tax reduction, and legacy planning.
4. Direct Indexing with SMAs
Rather than buying an S&P 500 index fund, an SMA can replicate the index by owning all 500 stocks individually. This unlocks daily tax-loss harvesting opportunities. As you're systematically selling your concentrated position and paying taxes, your SMA is generating losses to offset those gains. Over a 10-year horizon, the tax-alpha from direct indexing can be substantial: often enough to pay the advisory fee several times over.
For more technical details on SMA structures and their benefits for high-net-worth portfolios, see our detailed comparison of SMAs vs. mutual funds.
Estate Planning Integration: The 2026 Cliff
Concentrated stock management isn't just about taxes today: it's about estate planning too. Under current law, the federal estate tax exemption sits at approximately $13.6 million per individual ($27.2 million per married couple). But those exemptions sunset on December 31, 2025, potentially dropping to $7 million per person.
If your concentrated stock position pushes your estate over these thresholds, you need to be diversifying and implementing gifting strategies now. The combination of concentrated stock risk, estate tax exposure, and the 2026 sunset creates a planning urgency that requires coordination between your wealth advisor, estate attorney, and CPA.
For families in Jupiter Island and Palm Beach with multi-generational wealth goals, check out our estate tax survival guide for specific action steps before year-end 2025.
Why the Fiduciary Standard Matters for Concentrated Stock Decisions
Commission-based brokers face conflicts of interest when managing concentrated positions. Selling your stock and reinvesting generates commissions. Recommending high-commission insurance products or annuities to "protect" your position generates even more. As a fee-only fiduciary firm, we have zero financial incentive to recommend transactions beyond what's in your best interest.
Our compensation model is simple: you pay an advisory fee based on assets under management. Whether you sell your concentrated position tomorrow or over five years, whether you use SMAs or ETFs, whether you implement a CRT or an exchange fund: our compensation doesn't change. This alignment of interests is why Palm Beach corporate financial planning requires a fiduciary partner, not a salesperson.
For additional resources on Florida domicile optimization and tax planning, visit 1715tcf.com, a comprehensive resource for families navigating Florida residency and tax efficiency.
Your Next Step: Qualify for an Appointment
Concentrated stock positions don't fix themselves. Every day you wait is another day of unnecessary risk and potentially missed tax-planning opportunities. If you're a corporate executive with $2 million or more in investable assets, at least 20% of which is in a concentrated stock position, we should talk.
Our process starts with a confidential questionnaire to determine fit. Not every prospective client is right for our fee-only fiduciary model, and we're selective about the families we serve. But if you're committed to sophisticated, tax-efficient wealth management and you're looking for a strategic partner: not a product salesperson: schedule a discovery call through our website.
Managing concentrated stock isn't about perfect timing or predicting your company's stock price. It's about building a disciplined, tax-efficient diversification strategy that protects your wealth, funds your goals, and positions your estate for multi-generational success. Let's build your playbook.
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