From 2005 through 2008, I worked at Boston Private Financial Holdings. It was my first employer in financial services and an important early chapter in my career.
During much of my time there, the company was growing and its stock had performed well. Like many employees who believe in the organization they work for, I wanted to participate in that growth. I purchased company shares through the employee stock purchase plan, which allowed me to buy the stock at a discount.
At the time, it seemed like a compelling opportunity. I understood the company, believed in its future, and had watched the stock rise. The purchase discount made the investment feel even safer.
Over time, however, the position grew to approximately 25% of my net worth.
I did not think of myself as taking excessive risk. I thought I was investing in a company I knew and trusted. Looking back, that familiarity created a false sense of security.
When the environment changed
As the financial crisis unfolded, Boston Private encountered significant credit losses, particularly from real estate construction and land loans.
The company ultimately survived, but its survival did not protect shareholders from substantial losses.
The stock declined by approximately 75%. Because the position represented such a large portion of my net worth, the effect on my finances was meaningful. I remember watching the stock plummet and feeling both disappointed and embarrassed.
That experience taught me that understanding a company does not mean you can anticipate every risk it may face. Fortunately, this happened early in my career, and I had time to rebuild.
Familiarity is not the same as safety
Employer stock can feel safer than an unfamiliar investment. Employees see the company’s products, leadership, customers, and culture firsthand. That proximity can create confidence, but it can also make it harder to evaluate the investment objectively.
There is another layer of risk as well: your salary, career opportunities, benefits, and investments may all depend on the same company.
If the company experiences difficulty, its stock may decline at the same time that bonuses are reduced, advancement opportunities disappear, or jobs become less secure. What appears to be one investment position may actually represent several forms of exposure to the same underlying risk.
The employee stock-purchase discount is only the beginning
Today, I would still consider participating in an attractive employee stock purchase plan. However, I would establish a maximum position size in advance and a process for regularly selling shares and diversifying the proceeds.
My goal would be to capture the benefit of the purchase discount without allowing the stock to quietly become an outsized portion of my financial life.
What matters most is establishing the limit before emotions, loyalty, or a rising stock price begin influencing the decision.
Diversification can feel unnecessary until it matters
Diversification often appears least valuable when one investment is performing particularly well. Selling part of a successful position can feel like giving up future gains, especially when the company continues to report strong results.
But diversification is not based on knowing which company will struggle next. It is an acknowledgment that the future includes more possible outcomes than we can confidently predict. Even experienced economists and market forecasters regularly misjudge the timing and magnitude of major changes.
The mistake I made was not believing in Boston Private. The mistake was allowing that belief to determine too much of my financial outcome.
How that experience influences my work today
My experience with Boston Private continues to shape how I advise clients who hold concentrated stock positions.
The right decision is not always to sell everything immediately. Taxes, trading restrictions, personal circumstances, charitable goals, liquidity needs, and the investor’s broader portfolio all matter. Some investors may choose to retain a meaningful position because they understand and accept the risks.
When helping a client evaluate a concentrated position, I do not begin with the assumption that the client should sell everything or continue holding. We consider how each available choice, and a range of potential outcomes, could affect the client’s broader financial plan.
The important step is to make the decision deliberately rather than allowing familiarity, loyalty, or recent performance to make it by default.
Diversification may limit some upside if a concentrated position continues rising. But it can also help protect the financial flexibility and peace of mind that took years to build.
How We Think About This at Azul Private Wealth
Our approach is centered on long-term investing, broad diversification and building portfolios around each client's individual goals rather than short-term market predictions. If you'd like to talk through what your own portfolio actually holds, we're happy to start that conversation.
This material is provided for informational and educational purposes only and should not be considered individualized investment advice. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.