Why Affluent Families Fail to Mitigate Concentration Risk

Creighton Hardy, a wealth management advisor at WestPac, argues that these families are not under-advised but rather un-coordinated. While clients frequently employ a team of specialists—including CPAs, attorneys, and wealth managers—each professional typically operates in a silo. This results in four separate opinions that fail to address the primary threat to a client's balance sheet: the single business or stock position where most of their net worth resides.

Most investors mistakenly treat concentration as a portfolio issue, but Hardy defines it as a structural failure. When tax, protection, and investment decisions happen independently, the design of the overall financial architecture is neglected. For business owners, the common error is waiting for a company exit to build personal wealth. WestPac advocates for building assets in parallel through defined benefit plans and cash balance plans, which move capital off the business balance sheet without disrupting cash flow.

For executives holding large positions in employer stock, the firm suggests multi-year, tax-aware diversification. Using tools like direct indexing, donor-advised funds, and staged sales during low-income years allows investors to reduce exposure while maintaining tax control. The firm emphasizes that success requires reversing the traditional order of operations: designing the architecture first and executing the plan as a unified whole. Ultimately, protecting wealth requires a level of planning that transcends the individual optimization of separate financial corners.