Most financial advisors are occasionally faced with clients whose portfolios are weighted too heavily by the stock of a single company. Often, these individuals are approaching retirement, having bought or received a particular employer's stock over many years, or they have inherited the stock upon a relative's death. But whatever the reason, it can be tough to convince them of the need to diversify. Advisors suggest various approaches—though they acknowledge their clients' concerns.

It's not an easy situation, according to Judith McGee, chairwoman and CEO of McGee Wealth Management, in Portland, Ore., who says she can relate. McGee's firm, which manages $406 million in assets, has been affiliated with Raymond James Financial Services since 1989. Along the way, she has amassed a large quantity of Raymond James stock in bonus compensation, which now accounts for a significant percentage of her own portfolio. She knows based on her professional experience that she needs to diversify, but if she sells the shares, she could be forced to pay taxes on the capital gains.

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