Silicon Valley’s Elite Financial Advisers Say This Era of Wealth Is Different

If anyone in tech has already started their Hot IPO Summer, it’s Silicon Valley’s elite wealth advisers.

Two private wealth managers who work with high-net-worth techies told me they’ve seen an uptick in activity from their client base, some of whom are expecting a big liquidity event this year. We’re talking, of course, about the employees and early investors at SpaceX, OpenAI, and Anthropic who are coming into mind-boggling riches. (These wealth managers agreed to speak on the record but wouldn’t name specific companies, so any such references are my words, not theirs.)

Visions of super-yachts, air-cooled Porsches, and vacation homes with closets full of Loro Piana probably come to mind. But elite advisers say most of their clients are pretty strategic about their newfound wealth before purchasing big-ticket items, snapping up real estate, or plunging their money into meme stocks. (Some go big anyway.)

Ashley Velategui, the head of wealth strategies at Bernstein Private Wealth Management, who has been offering guidance to high-net-worth individuals in Seattle and the Bay Area for nearly 20 years, says she’s encouraging tech clients to figure out how much “core wealth” they need to feel financially independent before making any hasty moves. They should also consider that a balance sheet largely made up of one stock—like, say, SpaceX—can shift dramatically in value over time.

Brittany Boals Moeller, who heads up Goldman Sachs’ West Coast wealth management division and who moved to the Bay Area last year to cater to the tech crowd, says that overall the “pace and the scale of wealth creation seems faster than before.” As she sees it, “a lot of what we’re doing is pre-IPO planning now.”

A few insights I gleaned from my conversations with them:

The definition of wealth has changed. Velategui says that there’s more ambiguity now around how people in tech define high or ultra-high net worth. The mega rich used to be anyone with a pot of $25 million to $30 million, but these days her average client tends to be worth somewhere between $20 million and $100 million.

Velategui adds that clients are considering forming a “family office”—a small private company that manages a family’s wealth and assets—much earlier than they have historically. Her ultra-high-net-worth clients are now setting aside $25 million for family office formation alone, which means their total wealth extends far beyond that.

“Lock-up periods” can be tricky to navigate. “Hot IPO Fall” doesn’t sound as vibe-y as “Summer,” but the reality is that most employees and early investors won’t be able to sell their stock until the lockup period following an IPO has ended. This is to protect the market from a destabilizing oversupply of stock; typically, the lockup period lasts 180 days.

Even in the case of “staged” lockups, employees are urged to proceed with caution, Velategui says. These phased tranches introduce more complexity because there are more points at which the stockholder can sell, and the liquidation process requires more management.

Tax minimization is still the goal. Selling shares can come with a hefty tax liability, and wealth managers are coming up with all kinds of sophisticated ways to let their tech clients spend their money without selling their shares.

Velategui ticks off a few of her clients’ strategies, including variable prepaid forwards, short box spreads, or borrowing money against their brokerage firm.

“The one that seems to be coming up within this community most frequently is variable prepaid forwards,” she says. With this strategy, the seller enters a contract with a financial institution to receive an upfront, tax-deferred payment for their shares, and agrees to hand over those shares to the bank at a future date. These strategies are not without risk—and they’re still subject to tax scrutiny—but what is Silicon Valley if not insanely risk-tolerant?