Ready to Speak With an Advisor? Call (858) 222-8050

Stock Option Anxiety is Real. The Good News is It’s Manageable


Speak with an advisor

There’s no better time than now to protect the wealth you’ve built. Contact us today to speak with an advisor.


by  Keith McKenzie

It’s a bit like that uneasy feeling you get when think you may have left garage door open. Except it’s always there, just under the surface, nagging at you, making it difficult to relax and enjoy your downtime. For corporate executives, the anxiety that arises from mismanaging their stock options is very real. The good news is it’s manageable.

In order to alleviate your stock option anxiety, you need to take a step back from your finances and do two things: One, you need to be honest with yourself that the problem exists. Admitting to suboptimal management of personal finances is not an easy thing to do for most corporate executives. But it’s only after you admit the problem exists that you can do the second thing necessary to alleviating your anxiety: Identify the reason or reasons why you’ve been mismanaging your finances.

Common Reasons Why Executives Mismanage Their Stock Options

Mismanagement of stock options can be caused by any number of reasons, but a few float to the top as the most common. Chief among them is overconfidence. Overvaluing your own company’s stock, and/or your ability to control the future of that stock, are common experiences for corporate executives. It’s understandable for those executives to believe their company’s stock is superior to just about every other company or investment. But when reality comes calling, as it so often does, and their wealth is destroyed, anxiety turns very quickly into “How could I have been so out of touch?”

Another common cause of suboptimal financial strategy resulting in anxiety is anchoring. Anchoring is a psychological bias that leads to an irrational inability to sell—or to reduce exposure to a concentrated stock position—unless the stock hits a previously established high price level. Anchoring is a deep-seated cognitive block that has undone more than a few otherwise competent investors. Because of the paralysis caused by anchoring, investors like these fail to implement a thoughtful financial plan to manage what could be the biggest risk to their financial future. The result can be tremendous anxiety as they continue to hold a large concentrated position in a stock whose price continues to decline.


The problem is that when it comes to the management of stock options, corporate executives are often the victim of their own intelligence. Whether it’s the complexity of tax regulations or the optimal order in which to sell their stock, the typical corporate executive recognizes there are things he doesn’t quite understand with regard to his concentrated position. He knows he’ll have to get help from somewhere, he just doesn’t know where. This acknowledgement of the need for help combined with the lack of knowing where to get it, often leads to inaction. And inaction increases the anxiety he is already experiencing.

What’s more, when our typical corporate executive is finally willing to admit he needs help, that help is inevitably going to come from a coordinated effort of his tax, legal, and financial advisors. Unfortunately, but possibly well-deserved, the financial services retail world does not engender much respect among successful corporate executives. Therefore, not only does our typical corporate executive not have control over the situation (a worrisome feeling that he’s unaccustomed to), he’s also forced to engage someone from an industry he feels might not have his best interests in mind. The alternative is a poorly executed diversification strategy. Realizing these are his options, he continues to kick the can down the road, and his anxiety grows ever larger.

How to Manage Stock Option Anxiety

If you find yourself in a situation of mounting anxiety due to any of the above biases or factors, you’re not alone. The good news is this common anxiety is manageable. There are essentially three courses of action you can take with regards to stock option anxiety:

  1. Do nothing. Ignore the problem and it will resolve itself one way or another.
  2. Attempt to solve it on your own. Do your best to muddle through the complexities of your concentrated position, making decisions without sufficient information or without first doing the appropriate level of due diligence.
  3. Allocate the necessary amount of time and effort it takes to devise a comprehensive, thoughtful solution to the problem.

At the risk of stating the obvious, options 1 and 2 are not advisable routes to take. Neither refusing to deal with the problem nor pursuing a half-hearted strategy without adequate resources at your disposal will alleviate your anxiety. These tacks are likely only to exacerbate it.

Truly the only way to manage and reduce the anxiety that arises from a concentrated stock position is to spend time finding the right advisory team, vet the strategy they propose, and devise a plan to execute it. Working with a competent team consisting of legal, tax, and wealth management professionals with the expertise to optimize your risk and minimize your tax obligations is the first step on your journey to a financial life with less anxiety.

Not only will the right team with the right plan measurably reduce your anxiety, it will also measurably increase your likelihood of realizing a lucrative outcome with regards to your stock options. It’s in the best interest of both your mental and financial health. Yet still, there are scores of corporate executives who choose not to take this approach.

The Takeaway

Whether because of obstinacy, overconfidence or anchoring, an inability to act is the ultimate cause of stock option anxiety. The first step is recognizing the problem exists, the next is assembling a skilled team to help you. The best advice is not to wait. The sooner you begin to address the problem, the sooner you can enjoy the relief that comes from an anxiety-free financial situation.



Speak with an advisor

There’s no better time than now to protect the wealth you’ve built. Contact us today to speak with an advisor.