Managing Concentrated Stock Positions for P&G Employees

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As a dedicated Procter & Gamble (P&G) employee, you likely have accumulated a substantial position in P&G stock through years of service and participation in the Profit Sharing Trust & Employee Stock Ownership Plan (PST Plan). While this concentrated holding can be a testament to your commitment and the company’s success, it also introduces unique risks that require careful management, especially as you approach retirement.

Understanding Your P&G Stock Position

Many P&G employees accumulate a high concentration of company stock without actively planning for it. Understanding how this happens is the first step toward addressing it.

It’s common for P&G employees to have a high allocation to P&G stock. This is largely because company-funded PST contributions are made exclusively in the form of P&G stock each year. Additionally, diversification within the PST is restricted: you cannot begin to diversify your holdings until reaching age 50, and even then, you are required to maintain at least a 40% allocation to P&G stock in your PST account. These restrictions do not apply to the Procter and Gamble Savings Plan, where you have more flexibility to diversify your investments at any time.

The Risks of Concentration

Concentrated positions in any stock can pose long-term financial challenges, even for stable companies like Procter & Gamble.

While P&G’s track record is strong, holding a large portion of your wealth in a single stock exposes you to several risks:

  • Volatility: Your portfolio experiences significant swings tied to P&G’s performance.

  • Company-Specific Risk: Events unique to P&G could disproportionately affect your financial well-being.

  • Sector Risk: The consumer goods sector’s performance can heavily influence your portfolio.

  • Opportunity Cost: Concentration may limit your exposure to growth in other sectors or asset classes.

  • Emotional Bias: Deep company loyalty can sometimes cloud objective financial decisions.

The Retirement Perspective

As retirement approaches, portfolio structure matters more than ever. Concentration risks can compound during this transition period.

  • Shortened Recovery Time: There’s less time to recover from potential market downturns.

  • Sequence of Returns Risk: If P&G stock underperforms early in retirement, it could accelerate portfolio depletion.

  • Net Unrealized Appreciation (NUA) Opportunities: Properly timing the distribution of P&G stock from your retirement plan can unlock significant tax savings through the NUA strategy, which allows for preferential tax treatment on the appreciation of employer stock.
    (Learn more about NUA strategies for P&G retirees)

If you're exploring options for help with P&G retirement planning, this phase is often where thoughtful strategies make the biggest impact.

Strategies for Risk Management

Balancing loyalty to P&G with long-term security requires a plan that reflects your full financial picture.

  • Gradual Diversification: Systematically diversify your holdings as plan rules permit, reducing your exposure over time.

  • Holistic Portfolio View: Assess your PST and Savings Plan holdings in the context of your entire investment portfolio, including outside assets.

  • Tax-Efficient Strategies: Explore options such as donating appreciated shares to charity for potential tax benefits, or leveraging NUA and other distribution strategies.

  • Consider Allocation Across the Full Portfolio: Reducing concentrated exposure to consumer staples in other parts of your portfolio—such as taxable accounts or IRAs—can help offset the weight of P&G holdings without immediate liquidation. A customized, coordinated approach allows for flexibility while still respecting plan limits.

  • Option Strategies: In select cases, advanced strategies like protective puts or collars may help hedge concentrated risk. These tools require specialized expertise and careful implementation.

  • Exchange Funds and Other Alternatives: Less commonly used but potentially valuable in certain scenarios, exchange funds allow you to contribute concentrated shares in exchange for a diversified basket of holdings. These strategies come with complexity and limitations but are worth exploring for qualified investors.

Every client’s situation is unique, and the right mix of strategies will depend on your goals, risk tolerance, and emotional comfort with diversification.

A Real-Life Example: Balancing Strategy and Sentiment

Consider a recent P&G retiree from the Cincinnati area who began working with us at Vaultis Private Wealth in late 2024. After a long and successful career, he found that nearly 70% of his retirement assets—across both his PST and Savings Plan—were allocated to P&G stock. This level of concentration is not uncommon among long-tenured employees, and it often comes with a strong emotional attachment to the company’s shares.

We developed a plan to gradually diversify his holdings while honoring his connection to P&G. After completing his full distribution, which included leveraging Net Unrealized Appreciation (NUA) and a Duke Rollback, we took a two-pronged approach. First, we targeted his NUA shares in his taxable account, planning to use them strategically over time as part of his Lifestyle Funding Strategy. Second, to begin the diversification process, we sold an initial 15% of his P&G shares in his IRA at an attractive price. From there, we set up a disciplined schedule to sell a set number of shares each month, with the goal of reducing his P&G exposure to approximately 15% by the end of 2025. This evolving process allows us to introduce flexibility and adjust the plan should P&G’s price appreciate or depreciate more than expected.

He appreciated having a plan that didn’t require abandoning the stock all at once. The emotional side of retirement planning is real—and when addressed thoughtfully, it doesn’t have to conflict with financial goals.

It’s important to recognize that every individual’s emotional connection to P&G stock is different. Some employees feel a deep sense of loyalty and pride, while others are more comfortable viewing their holdings objectively. Either perspective is valid, and both should be respected in the planning process. Even for those with a strong attachment to the stock, it remains essential to reduce concentration risk to an appropriate level to protect long-term financial security. Our flexible approach ensures that your financial plan honors your unique relationship with P&G while prioritizing your future stability.

Partnering for Your Financial Future

P&G’s retirement ecosystem is complex, including the PST, Savings Plan, LTIP elections, NUA strategies, and concentrated stock positions. At Vaultis Private Wealth, we work closely with Procter & Gamble employees and retirees to help them make sense of it all. Managing a concentrated stock position is just one area where we bring clarity and experience. We’ve guided many through similar transitions and understand how each decision connects to the bigger picture.


Frequently Asked Questions

What is the PST Plan and how does it work?

The Profit Sharing Trust (PST) is a retirement plan funded annually by P&G in the form of company stock. Employees cannot diversify their holdings until age 50 and must maintain a minimum 40% allocation to P&G stock within the PST after that age.

How do I know if my P&G stock concentration is too high?

There’s no one-size-fits-all number, but if more than 20–30% of your total net worth is in P&G stock, it may be time to consider diversification. We help assess this in the context of your full portfolio and goals.

What is Net Unrealized Appreciation (NUA) and why does it matter?

NUA is the gain on P&G stock held in your retirement plan. When handled correctly during a distribution, you may pay ordinary income tax only on the cost basis, while the appreciation is taxed at long-term capital gains rates.

Can I still benefit from NUA if I’m retiring before age 59½?

Yes, in many cases. If your distribution qualifies as a lump-sum and meets certain IRS rules, the NUA strategy may still apply, though early withdrawal penalties could affect some parts of the distribution. It’s worth reviewing with an advisor.

What if I feel emotionally attached to my P&G shares?

That’s very common among longtime employees. At Vaultis, we respect that connection and work with clients to develop a gradual, personalized approach that aligns with both their financial and emotional comfort.

Are there other advanced strategies for managing a concentrated position?

Yes. Options strategies, tax-aware charitable giving, portfolio offsetting, and even exchange funds may all be viable depending on your situation. Not all are appropriate for every client, but they’re worth discussing with an advisor.

Disclosures: Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy will achieve its objectives. The information provided is not intended to be tax advice. Please consult a tax professional for specific tax advice. This article is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities or investment products. Always seek the advice of a qualified financial advisor with any questions you may have regarding your financial situation.