When Your Portfolio Tells a Story: Navigating the Emotional and Financial Complexities of Divestment
Current 15 - Insights - By Ali Motroni and Courtney Joyner Gage
At Align Impact, it is common for new clients to come to us with an existing concentrated stock position. It can feel overwhelming and/or daunting to consider liquidating those positions, which are often low in cost basis, high in capital gains, and sometimes even carry emotional weight due to family legacy.
Align’s approach to divesting from these positions is guided by a balance of financial prudence and values alignment, ensuring clients are not only protecting their assets but also investing in ways that reflect their core principles and honor their stories. We balance divesting FROM something with a focus on what each client wants to move TOWARDS with their wealth.
Like all our conversations with clients, we like to dig into the “why” first. Although financial risks are important to address, it is equally as important to understand the story attached to that concentrated stock position. Did your grandparents start the business, and this holding is part of your family legacy? Are you bullish on a certain industry or company because you worked in it for 50 years? Is it just part of your compensation from a prior role that holds no meaning for you? For us to provide the right recommendation, we have to customize it for a client’s unique experience.
From a financial perspective, concentrated stock positions can create immense financial risk and often represent a significant portion of an individual's wealth. The risk typically comes from:
Market Volatility Exposure: A single company’s downturn can disproportionately impact personal wealth.
Values Misalignment: The company may operate in industries or ways that conflict with the client’s values, such as those contributing to environmental harm or social inequities. Whether that’s because the position was inherited or because the wealth creator has continued to evolve their own values, both are valid.
Large Imbedded Capital Gains: Often an individual has a low cost basis associated with these shares, so transitioning out of the position can be costly from a tax perspective.
At Align, we recognize that divestment isn’t just about reducing risk—it’s also an opportunity to reinvest purposefully. Here’s how we can help:
Strategic Transition Plans: Our team collaborates with each client to craft curated divestment strategies that minimize tax implications and align with their long-term goals. We prioritize thoughtful timelines, leveraging tools like charitable trusts or donor-advised funds when appropriate, to amplify the impact of these transitions. Our clients are often surprised at how their wealth can grow and/or generate necessary income in other asset classes, like affordable housing funds or private debt funds.
Reinvestment into Impact-Aligned Portfolios: Once divested, we help each client redeploy capital across asset classes- helping them diversify financially and from an impact perspective. We have a team of 9 full time investment researchers who are finding the highest conviction investments from private debt to real assets to venture capital funds. These decisions are not just financially sound but also help create a more equitable and sustainable future. For example, we’ve seen many clients invest capital into funds addressing systemic issues like affordable housing, clean energy, or gender equity.
Client Empowerment Through Education: A core differentiator of the Align team is that we are committed to empowering clients along the way. We ensure clients understand the "why" and "how" of their divestment and reinvestment strategies. We educate about the role of different asset classes in building a savvy portfolio strategy and in addressing systemic issues. Transparent guidance helps demystify the financial and societal impact of their choices, transforming the process into an empowering journey.
Our work with clients isn’t just about individual portfolios—it’s about contributing to a larger movement. By helping clients divest from positions that no longer serve them or align with their values, we enable them to take part in reshaping the future- a financial system that prioritizes inclusivity, equality and sustainability for the current generation and generations to come. At Align, we are proud to guide clients through this process in a thoughtful, values-driven, and financially prudent way.
