Monitoring concentrated positions across client accounts: a routine for small RIAs
A concentrated position is a single holding that makes up a large share of an account or household. Monitoring them means setting a review threshold in your procedures, checking holdings against it on a regular schedule, looking at the household as well as each account, and recording what you found and what was decided. The threshold and any action are the adviser's judgment; the routine makes sure nothing is missed and every decision is written down.
A client's employer stock has done well for years. It's now a third of their portfolio, split across a 401(k) rollover, a brokerage account and their spouse's IRA. No single account looks alarming. Across the household, it's the biggest risk they have, and there's no note anywhere that anyone discussed it.
What is a concentrated position?
A single holding that makes up a large share of an account or household. Common sources are employer stock, an inherited position, a long-held winner, or a holding with large unrealised gains that nobody wants to sell.
How do you set up a routine?
- Set a review threshold in your procedures: the share of an account or household that triggers a review. This is a firm decision, not a rule in this guide.
- Check on a schedule: monthly or quarterly, and when large deposits or transfers arrive.
- Look at the household, not just each account.
- Review each flag: is it intended, restricted, or something to discuss?
- Record the outcome and the date of the next review.
A worked example
Take a hypothetical two-person RIA whose procedures set a household review threshold. In its quarterly check:
| Household | Flag | Outcome |
|---|---|---|
| A | Employer stock across three accounts | Discussed with client; client chose to keep it for now; noted in IPS as a restriction; review next quarter |
| B | A single fund after a large transfer in | Transfer still being invested to model; no action; recheck in a month |
| C | Inherited stock with large gains | Discussed a staged plan with client and their tax adviser; plan and decision recorded |
None of these needed the same action. All three needed a record.
What should the record show?
- The holding, its share of the account and household, and the date checked.
- Why it exists: intended, inherited, restricted, transitional.
- What was discussed with the client and what they decided.
- Any change to the IPS or restrictions.
- The next review date.
Common gaps
- Checking accounts one at a time and missing the household total.
- A client decision made on a call and never written down.
- A restriction agreed with the client that isn't in the IPS, so the model keeps trying to trade it.
When is this overkill?
If every client is fully in diversified model portfolios with no outside holdings, flags will be rare. The routine is still a few minutes a quarter, and it catches the transfer-in that arrives as a single stock.
How Advorra fits
Advorra's portfolio analytics include allocation and concentration views, accounts sit under their households, and restrictions and strategy changes can be reflected in the IPS and the Strategy Journal. Trade holds can stop an account from trading while a decision is pending. See the product page, or read when to update an IPS and suitability reviews.
One thing to do this week: list every household where one holding is above your review threshold, and check there's a recent note for each.
An operations routine, not investment or tax advice. Thresholds and decisions are the adviser's.
Questions advisors ask
What threshold counts as concentrated?
There's no single answer. Firms set their own review threshold in their procedures, often as a percentage of the account or household, and may vary it by security type. This guide doesn't recommend a number.
Should I check by account or by household?
Both. A position can look modest in each account and still be large across the household, especially with stock held in several accounts.
What if the client wants to keep the position?
Record the conversation, the risks discussed and the client's decision, and reflect any restriction in the IPS. Review it again at the next cycle.
Do ETFs and funds count?
Broad funds are usually treated differently from single stocks, but your procedures should say how. Some firms also look through to the underlying holdings.
Is this investment advice?
No. It is an operations routine for spotting and documenting concentration. Investment decisions are the adviser's.
See it on a demo firm
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