Many of our clients are faced with a situation where one single equity position represents a large portion of their net worth, generally 20% or more of their total net worth. These large positions have typically been accumulated over a long period as a result of compensation from a current or previous employer, exercise of employee stock options, gifted or inherited stock, stock received from the sale of a business, or a large position of highly appreciated stock obtained in the open market. Concentrated positions pose significant risk to the client's net worth given the volatile nature of the stock market. There are many unique challenges in managing these positions, including, but not limited to: restriction on sale of shares, tax liabilities due to a low cost basis, retaining high dividends, or emotional ties.
BB&T Scott & Stringfellow has specialized resources to use strategies designed to help you to manage the risks associated with a concentrated position. The flexibility of these solutions allows us to customize a strategy that fits your circumstances. Goals of these strategies often include one or more of the following: income, monetization, hedging, diversification, and wealth transfer. In addition to the use of these solutions, we can facilitate Cashless Stock Options Exercises and Restricted Stock Sales, two very effective risk management tools. These solutions can be used for individuals, trusts, foundations, and some corporations. Regardless of the entity, we have one common goal: to do what is best for you, our client.
By serving as consultants, we feel that we can be more objective and focus strictly on your needs. Our trading desk does not play a role in which a conflict of interest may be present, as is the case with many dealers. By maintaining relationships with multiple dealers, we are able to force our partners to compete in order to achieve competitive pricing. Our approach when analyzing your situation is in-depth and consistent. The process of developing a customized strategy for you usually tracks as follows:
Your Financial Advisor
Your first point of contact will be your Financial Advisor who will obtain all of your relevant financial information and will assess your investment goals, concerns, and risk tolerance. In order to better narrow down the strategies that may be appropriate for you, your Financial Advisor will have to determine the following:
Your Customized Strategy
Once your Financial Advisor has pulled together your financial and investment profile, our expert on Concentrated Stock Solutions will develop a strategy which best fits your needs and will contact a number of exchanges and broker dealers in the industry to find you the best price possible. The strategy, along with all related costs, will then be presented to you by your Financial Advisor, often in conjunction with our internal expert.
Executing Your Strategy
Once you decide the recommended strategy is appropriate, we will assist you in determining the proper timing in execution. Successful timing, as with most investments, is critical to maximize the benefits of your strategy. Once the timing appears ideal, we will again seek out as many competitive offers as possible to ensure the best execution for you. Since BB&T Scott & Stringfellow will serve as agent in this transaction (rather than making a profit as a principal trader) we can be a true partner for you by maintaining all objectivity and focusing on what is best for you.
BB&T Scott & Stringfellow will not abandon you once the strategy is in place. We will support the transaction until the expiration of the contract and recommend potential follow up strategies that may be optimal for you, including closing the original positions and/or establishing new positions. Also, your Financial Advisor will continue to support you in the diversification of your portfolio.