u/Beginning_Medium_218

I have a client whose mother recently passed away. Roughly $2.5 million of a $3 million portfolio is concentrated in Exxon stock with significant embedded capital gains. The assets are held inside a family limited partnership, so approximately 75% of the position did not receive a step-up in basis.

The client is relying on the portfolio for lifestyle income, but also wants to structure the assets for long-term, multi-generational wealth preservation. My primary concern is the concentration risk. Exxon has had a tremendous run over the last several years, and I worry about the potential impact if valuations revert closer to historical norms.

At what point do you determine that the risk reduction and diversification benefits outweigh the cost of realizing long-term capital gains? More specifically, how do you evaluate when it makes sense to begin reallocating a highly appreciated concentrated position like this?

I think I’m getting into a real predicament here. I was part of an RTP at Edward Jones, and from day one the advisor and I really haven’t seen eye to eye on portfolio management or client relationships. To be fair, there are a lot of things he’s done right, and at his core I genuinely believe he’s always tried to act in clients’ best interests. But there are certain client situations and portfolios I’ve reviewed that make me cringe.

I think the latest case may end up being the straw that breaks the camel’s back.

I met with a client who has roughly $2 million in investable assets sitting in a brokerage account. The portfolio is structured as a traditional 60/40 allocation, but the entire fixed-income sleeve is made up of individual municipal bonds with a 17-year duration — and no, that’s not a typo — despite the client being in only a 12% tax bracket. The muni portfolio is yielding around 3.5%, and there are significant unrealized losses there, offset by large unrealized gains on the equity side, which is primarily A-share American Funds.

Then you layer in the planning side. The client is trying to sell a business. He has a special-needs son who lives with his ex-wife, and he’s deeply concerned that if he dies and his son inherits the assets outright, the ex-wife will manipulate the situation and burn through the money. There are obvious estate planning and trust considerations here beyond just “manage the investments and move on.”

I pitched moving to a managed relationship centered around comprehensive financial planning. The client seemed genuinely engaged, excited, and relieved leaving the meeting — at least from my perspective.

Then that night I get a random email saying he doesn’t want to make any changes.

Obviously something felt off.

So I called him the next morning and asked whether he had seen or heard something that changed his mind. He says, “Well… I remembered talking to Johnny (former advisor) a few years ago and we didn’t do that kind of account, but I can’t remember why. I called him yesterday and left him a voicemail.”

Okay… odd.

So I call Johnny and ask whether he connected with the client. He says, “Uh actually yeah, we spoke, but I told him I haven’t had a chance to really look at the portfolio. I know there’s a bunch of bonds but I can’t really remember. I’ll call you back and we can talk more — I’m tied up right now.”

That was over 24 hours ago.

The stories don’t line up, and the reality is Johnny has hated financial planning and managed accounts since the day I got there. This relationship has been uphill from the start.

I’ll be honest — if I find out he’s actively undermining my recommendations behind the scenes, I’m not going to take that lightly.

Has anyone else dealt with this kind of situation? I’d genuinely appreciate pushback, perspective, or hearing from people who’ve navigated something similar.