In the world of ultra-high-net-worth investing, success is often its own greatest risk. Many of my clients reach the pinnacle of their careers with a “problem” most would envy: a massive, concentrated position in a single stock or industry. Whether you are an executive with decades of vested options or a founder whose net worth is tied to a private enterprise, you are carrying Concentration Risk.
After 27 years in the industry, including my work with the Royal Family of Dubai, I’ve seen that true wealth isn’t just about the courage to bet big—it’s about the wisdom to know when to hedge those bets.
Here is how we manage the “Concentration Risk” of success in 2026.
1. The Paradox: Concentration Creates Wealth, Diversification Preserves It
Almost every massive fortune is built on a single, concentrated bet. However, the market is littered with stories of “paper billionaires” who watched their wealth evaporate because they stayed too close to the flame.
The Goal: We don’t want to abandon the asset that made you successful. We want to “peel off” enough to ensure that even if that asset goes to zero, your lifestyle and legacy remain untouched.
2. Sophisticated Diversification Without the “Tax Shock”
The biggest hurdle to diversification is often the IRS. Selling a massive position can trigger a capital gains event that feels like a penalty for winning. To combat this, we use elite-tier financial engineering:
- Exchange Funds: For those with highly appreciated public stock, we can swap your shares for units in a diversified pool. This allows for instant diversification while deferring taxes for at least seven years.
- Direct Indexing (Tax-Loss Harvesting): We build a “shadow” portfolio of individual stocks that mimics a broad index. This allows us to harvest losses in specific companies to offset the gains from your concentrated position.
- Equity Collars: We can use options—purchasing a put and selling a call—to create a price “floor” for your stock. This protects the downside while maintaining a portion of the upside, often with zero out-of-pocket cost.+1
3. Managing the “Human” Concentration
At the level of the Dubai Royal Family or UHNW founders, concentration risk isn’t just about stocks—it’s about Human Capital. If your business, your board seats, and your personal investments are all in the same sector (e.g., Real Estate or Tech), you are more vulnerable than you think.
Advisor Insight: If your income comes from the same industry as your investments, a sector-specific downturn is a double-hit. True diversification means moving capital into “uncorrelated” assets—things like Private Credit, Infrastructure, or Global Farmland.
4. The 2026 Strategy: From Success to Significance
Managing concentration is also an estate planning opportunity. In 2026, with shifting tax landscapes, we often look at:
- Charitable Remainder Trusts (CRTs): Donate the concentrated stock to a trust. The trust sells the stock tax-free, provides you with an income stream, and supports your philanthropic legacy.
- Gifting to Heirs: Transferring shares to family members in lower tax brackets can dilute the concentration while reducing your taxable estate.
Your Next Move
Success is a powerful engine, but concentration is a volatile fuel. My role is to act as your “Chief Risk Officer,” ensuring that your greatest win doesn’t become your greatest vulnerability.
