Preserving the Value of a Concentrated Stock Position
Bill, a 54-year-old corporate executive, and his wife, June, have amassed considerable wealth. But with two sons headed to college, a daughter on her way to law school and plans to buy a vacation home, they’re bracing for higher expenses in the next few years.
A large portion of the couple’s wealth is concentrated in Bill’s company’s stock, and he anticipates receiving additional equity options in the coming years. But as the financial markets experience volatility, Bill and June are increasingly concerned about wealth preservation—specifically, maintaining the value of their holdings and maximizing saving opportunities in the most tax-efficient manner possible. They’re also at an age when estate planning needs are growing in importance.
Private Wealth Management team specialists reviewed Bill and June’s financial picture and developed a strategic diversification1 plan to monitor their portfolio and help minimize volatility that included stop-loss orders.
A stop order to sell—always at a price below the current market price—is usually designed to protect a profit or to limit a loss on a security purchased at a higher price. (The risk of stop orders is that they may be triggered by temporary market movements, or that they may be executed at prices several points lower than the stop price because of market orders placed ahead of them.)
In addition to providing important financial benefits, SunTrust’s wealth preservation strategies gave Bill and June a measure of comfort in the midst of an uncertain economic environment.