A majority of corporate executives worry about having most of their assets concentrated in one place, according to a survey released Tuesday by U.S. Trust Co.
Two-thirds of executives agreed that "too much of my net worth is tied up in my company's stock." More than 40% said financial planning is difficult because large proportions of their compensation are tied to their company's stock price.
Executives are one of the fastest-growing groups of private banking clients, said Jeffrey S. Maurer, president of U.S. Trust, New York. Managing their investments involves a temporary dilemma, he added.
"We'd probably be counseling that they should diversify out of their company stock as permitted," Mr. Maurer said.
He added that executives are caught in a "political situation" because they are expected to stand behind their decisions by holding onto company stock.
On average, their own company stock makes up 34% of their investment portfolios. Mr. Maurer said executives can diversify investments into sectors besides the one they work in with cash from after-tax savings and through 401(k) plans. He added that the new tax law lowered the federal capital gains penalty when exiting corporate stock to 20%.
The 150 executives surveyed have either a net worth of $3 million or annual gross income of more than $250,000. The survey was conducted by Financial Market Research Inc., New York.