By Dr. Tamara Patzer
In brief: Investors are taught not to put everything in one stock, yet many founders in the top 1% hold most of their net worth in a single private company. This market-minded feature looks at that concentration, what Americans say wealth takes, and what a New Orleans tax attorney says disciplined owners do before a liquidity event.
Every investor has heard the advice: do not put everything in one stock. Most founders have heard it too, and then gone home to a balance sheet that is built on exactly that mistake. New Orleans tax and estate attorney Todd M. Villarrubia makes the contrast a theme in his book, Entrepreneurial B.E.A.S.T. Mode™. His view is that the same owners who would never concentrate a brokerage account concentrate their entire net worth in one private company and call it conviction.
How Concentrated Is A Typical Founder’s Wealth?
Heavily. Villarrubia notes that most of a founder’s balance sheet is illiquid and sits in one asset, the company. The U.S. Small Business Administration counts 36,207,130 small businesses in the country, and for a great many of them the owner and the asset are the same thing4.
A stock investor can sell part of a position in seconds. A founder generally cannot sell part of a company without a buyer, a valuation, a negotiation, and often a tax bill. That is why the book distinguishes sharply between income and wealth: “Income is a flow; net worth is a stock.” The founder may have a strong flow and a large stock, but neither can easily be moved when the market changes.
Does A High Income Protect Against That Risk?
No, and the book says so in plain words. In Villarrubia’s words, “having a high income and high net worth in no way secures your future”. For tax year 2023, about $676,000 of adjusted gross income was enough to reach the top 1% of filers, and that group paid about 38.4 percent of all federal individual income tax, according to the Tax Foundation. Those households are not short of earnings. The question is whether the balance sheet behind the earnings can survive a bad year.
The Fed’s distributional accounts put the top 1% near $60.3 trillion in net worth in the second quarter of 20263. A founder’s share of the total sits in an asset that is much less flexible than a market position.
Why Do Founders Feel Poor When They Are Not?
Because the yardstick keeps moving. Charles Schwab’s 2025 Modern Wealth Survey found that Americans, on average, say it takes $2.3 million in net worth to be wealthy and $839,000 to be financially comfortable. A founder with a company valued at many multiples of that figure may still describe the situation as tight, since the cash on hand is small and every new dollar goes back into the business.
The market lesson is familiar. Paper wealth and spendable wealth are different things. Villarrubia’s book lists the events that convert one into the other: a public offering, a sale, a recapitalization, and a secondary sale. His advice is to decide how the owner wants those events to go before one arrives.
What Separates Owners Who Adapt From Owners Who Do Not?
Willingness to change the plan when conditions change. The book says it in one line: “Rigidity can destroy generational wealth; you must be able to adapt and react quickly.” It adds that the families who hold on to wealth share one trait: “The common thread among them all isn’t greed but discipline.”
In a market setting, the comparison is natural. An owner who writes down a target mix of risk and checks it on a schedule is acting like a disciplined investor. An owner who treats the company as untouchable is making a very large bet.
Who Should Be Advising The Owner?
A team, and not a collection of strangers. Villarrubia holds that the quality of the advisers sets the limit on the result: “the quality of your advisors determines the ceiling on your legacy”. His book describes the ideal as a group in which tax, law, investments, insurance, and business strategy are each covered by a specialist, and the specialists talk to each other.
The reason is practical. A tax adviser who does not know about a planned sale and an investment manager who does not know about the estate plan can each give sound advice that undoes the other’s. In markets, this is called a hidden correlation. In a family balance sheet, it is simply a missed phone call.
How Can An Owner Reduce Concentration Without Selling Out?
The point is not that an owner must sell. There are several ways to reduce the damage a single event can do, and they work best when started early:
- Hold different assets in different legal entities, so that a problem in one does not automatically reach another.
- Build liquidity outside the company over time, through distributions, a partial sale or a planned recapitalization.
- Write down the succession plan, including who decides if the owner cannot.
- Check the whole arrangement against current law on a schedule.
Each step has a tax and legal side that depends on the facts, so each needs a licensed professional.
What Is The First Diversification Step For An Owner?
Often it is not buying anything. It is building a second pillar of value outside the company, whether that is a portfolio, property held in a separate entity, or a reserve that can be reached quickly. Start with a number that feels small and add to it on a schedule. Over time the family’s fortunes depend less on any single customer, product or year, and a bad stretch at the company becomes a problem to manage and not a threat to everything.
Common Questions
Is Concentration Always Bad?
No. Many fortunes were built by concentrating in one business. The risk lies in staying concentrated without a plan for what happens if the business falters or the owner cannot continue.
Does Diversifying Mean Selling The Company?
Not necessarily. It can mean building cash and other assets alongside the company.
What Is The First Practical Step?
Many owners start by listing everything they own and noting how quickly each item could be turned into cash. The gap between the two columns shows how concentrated the position is.
Are The Figures Above Current?
They are the latest the cited sources provide, and they will change.
Sources
- Tax Foundation, Who Pays Federal Income Taxes? Tax Year 2023
- Charles Schwab, 2025 Modern Wealth Survey (Business Wire)
- Federal Reserve Distributional Financial Accounts, Net Worth Held by the Top 1% (FRED)
- U.S. Small Business Administration, Office of Advocacy, Frequently Asked Questions About Small Businesses 2026
About the author. Dr. Tamara Patzer is a publisher and former newspaper editor. She was on the staff of The Charlotte Sun when it was named a 2005 Pulitzer Prize finalist for its Hurricane Charley coverage.
About the source. Todd M. Villarrubia is an attorney with an LL.M. in Taxation and a Juris Doctorate. He is an Accredited Estate Planner, a Board Certified Expert in Estate Planning and Administration, and a Fiduciary Investment Advisor Representative. He is the author of Entrepreneurial B.E.A.S.T. Mode™. Wealth Planning Law Group, 101 W. Robert E. Lee Blvd., Ste 404, New Orleans, LA 70124. Phone: 504-982-8207; email: todd@lawealthplan.com; website: Wealth Planning Law Group
Disclaimer: Attorney advertising. Sponsored feature written on behalf of Todd M. Villarrubia. This article is general information, not legal or tax advice, and reading it does not create an attorney-client relationship. Results vary.
