A concentrated position is a single holding large enough that its performance materially drives a household's overall outcome — commonly stock in a company the owner founded or worked for. It is the dominant risk in many first-generation portfolios and often the hardest to reduce, for tax and emotional reasons alike.
Concentration is usually how the wealth was created, which is exactly why reducing it is difficult. The position that made the family wealthy is rarely the position best suited to keeping them that way.
Approaches include staged selling against a written schedule, charitable gifting of appreciated shares, exchange funds, and hedging strategies. Each has different tax, cost, and liquidity consequences, and the right combination depends on facts specific to the holder.
In Northern Virginia the pattern often appears as equity in a privately held government contracting business, where the position is illiquid until an exit or recapitalization makes it suddenly otherwise.
This definition is provided for educational purposes. It is general information, not investment, tax, or legal advice, and it does not account for any individual circumstances.