Advisors have different techniques to convince clients to sell when they should. Michael Goodman, president of Wealthstream Advisors in New York City, says he has clients in Atlanta who are emotionally tied to their Coca Cola stock because it is a familiar presence or because they work for the company. Also if a client buys a stock on their own they will have a personal stake in it succeeding, which Goodman calls loss aversion.

“I have clients who have stock they bought at $20 and now it is worth $12. I ask them if they would buy it at $12, they say no. So I ask them why they decide to do exactly that every morning that they do not sell,” says Goodman, who is a CPA/PFS, certified in both accounting and financial planning.

“I am offering them money in their pocket, plus we can use the losses to reduce the tax bill. Unfortunately, investing and human nature do not mix well,” he says. “If they are heavily invested in stock of the company they work for, I argue that they should not concentrate their human capital and their investments in the same place.”

Leonard Wright, a CPA/PFS at Northwestern Mutual in the San Diego area, sees clients who need to reallocate their portfolios to diversify.

“I’ve had clients who do not want to sell a particular stock because they saw their parents do well with it and now they have inherited it from their parents and are emotionally attached.

“One client had a concentrated portfolio of several million dollars before 2008. He could have diversified and retired then but he lost half of his money in the recession and was forced to keep working for several years,” Wright says. “I’ve also seen this with clients who own stock in oil and hang onto it because they worked for the oil industry. I try to show them that diversification can help them achieve what is important to them.”

Mackey McNeill, a CPA/PFS who heads Mackey Advisors in Bellevue, Ken., near Cincinnati, says her firm will not take on clients who do not do tax planning each year and look at the gains and losses in their portfolios.

There are a number of strategies that can convince clients to do what is in their best interests, she says. “We may even have to convince them to take some gains this year if they will be in a lower tax bracket now than they will be in the future.”

If clients are holding onto poor performing stocks for sentimental reasons, “we show them that if they want this stock so much, they will have to work an extra five years to compensate. At the end of the day, they usually agree to sell,” she says.

Mackey had one client who inherited a $3 million portfolio with $2.8 million of it invested in her dad’s company. Mackey was told, “Dad never sold and I am never going to sell.” Mackey kept running the numbers for her stock compared to the market as a whole. The firm finally convinced her to sell half of the company stock and then to sell most of the rest in 10 percent increments.