How we evaluate “Sell vs Hold” decisions on RSUs

Every vesting notification looks deceptively simple.
Shares settle. Taxes are withheld. A number appears next to a familiar ticker.

But the decision that follows, whether to sell or hold, is rarely about the stock alone. In practice, it is a capital allocation decision that touches concentration risk, income volatility, tax exposure, and future optionality. That’s how we evaluate it.

From an investment committee lens, RSUs are not a “special asset class.” They are a single-security exposure, acquired through compensation rather than market intent, embedded inside a much larger personal balance sheet.
Our role is not to predict short-term price movements. It is to determine whether retaining this exposure improves or weakens the client’s overall financial system.

Here is how we approach that analysis.

1. We start with first principles: RSUs are earned income converted into equity

By the time RSUs vest, the economic event has already occurred. The fair market value of the shares is recognized as ordinary income. Payroll withholding has happened. From that point forward, what remains is a portfolio decision, not a compensation one.

This distinction matters because “doing nothing” is not neutral. Holding is an active choice to allocate capital to a single stock, often the same company that already determines the client’s salary, bonus, future equity, and career trajectory.

So we reframe the question in capital allocation terms:
If this amount had arrived as cash today, would you intentionally deploy it into this one stock at this weight, given everything else you already own?

For most clients, the honest answer is no. That doesn’t automatically imply full liquidation. But it establishes a baseline: retention must be justified, not assumed.

2. We measure total employer exposure, not just the current vest

Next, we quantify concentration risk across the full balance sheet.

This includes:

• Vested RSUs
• Unvested grants (future expected exposure)
• ESPP holdings
• Options
• Cash flow dependence (salary and bonus)
• Career risk (role, team, industry cyclicality)

What often looks like a modest position in isolation becomes meaningful, sometimes dominant, once aggregated. From a portfolio construction standpoint, this is uncompensated risk. The client is not being paid a risk premium for holding more of the same exposure that already underwrites their livelihood.

When employer exposure exceeds reasonable guardrails (often ~10–15% of net worth, depending on stability and diversification elsewhere), our default bias shifts clearly toward systematic de-risking.

That usually means:

• Selling a majority of each vest on a recurring basis
• Defining a maximum employer-stock allocation and enforcing it
• Treating RSUs as a funding source for diversification, not accumulation

This is not just a judgment on company quality. It’s a recognition that concentration magnifies downside far more reliably than it delivers incremental upside.

3. We anchor decisions to a 3-5 year planning horizon, not short-term price action

Markets are volatile; life plans are lumpy. We consistently find that the most effective RSU decisions are tied to near-term capital needs, not quarterly earnings expectations.

So we ask:

• Is there a planned or probable job change?
• A home purchase or relocation?
• A shift in work intensity?
• Startup ambitions?
• Family obligations that will require liquidity?

In those scenarios, RSUs are not theoretical upside, they are one of the cleanest ways to convert earned value into optionality.
Honestly from my perspective, liquidity that funds flexibility often has higher real utility than marginal expected return from a concentrated equity position.
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Where near-term change is likely, we typically recommend selling earlier and more decisively, with proceeds assigned to explicit uses: emergency reserves, down payments, runway capital, or diversified long-term investments.When the client’s trajectory is stable and capital needs are already met, we may retain a measured allocation, but always within pre-agreed limits.

4. We model the tax year holistically, not just the vest

RSUs introduce complexity into tax planning because the major tax event occurs at vest, not sale.
Before recommending any course of action, we model:

• Total expected income for the year
• Prior RSU vests
• Bonus timing
• ESPP transactions
• Capital gains and losses
• State tax considerations (especially around relocation)

This allows us to assess two distinct risks:

1. Concentration risk from holding
2. Cash-flow and tax risk from under-withholding or timing mismatches

In years where withholding is clearly insufficient, holding a large RSU position compounds risk. In those cases, selling a significant portion promptly is often the most prudent course - even if the stock outlook is positive.

In other years, where loss carryforwards or bracket dynamics provide flexibility, we may structure sales more deliberately across months.
This is not market timing. It’s tax hygiene, ensuring the mechanics don’t become the dominant source of regret.

5. We evaluate the durability of the equity stream itself

RSUs are a flow, not just a stock.

Their strategic value changes dramatically depending on whether that flow is expanding, stable, or nearing its end.

For clients likely to leave their employer within a year or two, future RSU inflows are uncertain or disappearing. In those cases, holding existing equity becomes riskier because:

• Information advantage declines
• Compensation diversification increases
• Downside exposure remains asymmetric

Our bias here is conservative. We prefer converting earned equity into durable progress while visibility is high.
For clients early in their tenure, with multi-year grants ahead, the decision shifts from tactical to systemic: what rule should apply to every vest?
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That’s where we design repeatable policies, for example:

• Sell X% of every vest automatically
• Reallocate according to long-term targets
• Revisit the rule annually, not emotionally each quarter

Consistency matters more than cleverness.

6. We reconnect every recommendation to the client’s definition of success

Investments only make sense in the context of outcomes. So instead of framing decisions as “sell vs hold,” we translate them into consequences:

• What does selling this vest fund mean?
• What does holding this exposure delay or endanger?
• How does each option affect the probability of reaching stated goals?

Clients often find clarity when they see RSUs mapped directly to life milestones rather than abstract returns:

• Emergency resilience
• Housing flexibility
• Career optionality
• Family security

This reframing removes moral weight from the decision. It becomes a trade-off, not a test of conviction.

7. We account for behavioral risk, because it’s real

No investment framework is complete without acknowledging behavior.

Some clients are comfortable with volatility. Others find concentrated exposure mentally taxing: checking prices frequently, tying mood to market moves, second-guessing decisions.
From experience, we know that a theoretically optimal portfolio that induces chronic stress is functionally suboptimal. When behavioral load is high, we typically recommend:

• Lower employer-stock targets
• More automation
• Fewer decision points

Peace of mind is not a soft benefit. It’s a stabilizing input into long-term decision quality.

So what do we actually recommend?

If reduced to a single sentence:

For most high-earning professionals, RSUs are best treated as income first, capital second - sold systematically by default, and retained only where they fit clearly within risk, tax, and planning constraints.

But the real work is not the conclusion. It’s the framework that leads there, one that integrates portfolio construction, tax mechanics, career dynamics, and human behavior.

Our responsibility is to hold that complexity, so that vesting days don’t trigger uncertainty or reactive decisions.
Instead, the question becomes simple and familiar:

Given everything we already know about your life, your risks, and your goals - what allocation decision moves you forward with the least friction?

Sometimes that means selling most.
Sometimes it means holding a small, intentional slice.
Every time, it’s grounded in structure, not sentiment.

If you want a buy/sell brainstorm on your personal portfolio, don’t hesitate to reach out to my advisory team for a 1:1 dedicated session.