Silicon Valley's Elite Financial Advisers Say This Era of Wealth Is Different
Private wealth managers serving high-net-worth tech clients report increased activity as employees and early investors at SpaceX, OpenAI, and Anthropic anticipate major liquidity events. The definition of wealth has shifted, with clients forming family offices earlier and employing sophisticated tax strategies.
Two private wealth management firms, Bernstein Private Wealth Management and Goldman Sachs, have noted a rise in activity from tech clients expecting significant liquidity events this year. While they did not name specific companies, sources indicate these involve employees and early investors at SpaceX, OpenAI, and Anthropic.
Ashley Velategui, head of wealth strategies at Bernstein Private Wealth Management, who has advised high-net-worth individuals in Seattle and the Bay Area for nearly 20 years, encourages tech clients to determine how much "core wealth" they need for financial independence before making impulsive purchases. She also reminds that a balance sheet heavily concentrated in one stock, such as SpaceX, can fluctuate dramatically over time.
Brittany Boals Moeller, who heads Goldman Sachs' West Coast wealth management division and moved to the Bay Area to cater to the tech crowd, observes that the "pace and scale of wealth creation seems faster than before." Her practice now involves a lot of pre-IPO planning.
The definition of wealth has changed. Velategui notes there is more ambiguity about what constitutes high or ultra-high net worth. Previously, ultra-rich meant having $25 million to $30 million; today, her average client is worth between $20 million and $100 million. Clients are considering forming a "family office"—a small private company managing a family's wealth—much earlier. Her ultra-high-net-worth clients now set aside $25 million solely for family office formation.
Post-IPO, there are lock-up periods, typically 180 days, to protect the market from an oversupply of stock. Even in cases of staged lockups, employees are urged to proceed with caution as phased tranches add complexity.
Tax minimization remains a goal. Selling shares incurs significant tax liability, so wealth managers devise sophisticated strategies to let clients spend their money without selling shares. Velategui mentions variable prepaid forwards, short box spreads, and borrowing against a brokerage firm. Variable prepaid forwards are most common—a contract with a financial institution to receive an upfront, tax-deferred payment for shares, agreeing to deliver them later.
Wealth managers must prove they are better than AI. Clients come with more information and targeted questions thanks to AI access. Moeller adds that while clients do more introductory work via AI chatbots and podcasts, wealth advisers can offer advice that is "nuanced and not quite public knowledge." Goldman Sachs has also expanded concierge services, offering private aviation options, healthcare specialists, physical and digital security, hot tickets to events, and even education consulting for children.
Silicon Valley's flywheel effect is unique: founders and early employees often reinvest their windfalls into other tech startups or launch new ventures. Given that most startups fail, this is not the most rational use of wealth. Moeller works with many clients who channel significant sums into new startups, part of the advisory process involves considering "what the money really means to them."
Philanthropy is popular. Moeller says this new client class is particularly interested in "dramatically giving back" through philanthropy. Velategui has noticed the ultra-rich giving their children small funds to distribute, such as to animal rights groups, to teach stewardship of wealth. A top AI executive recently stated that this new philanthropy era will be more "pro-social" than previous, which had been more self-serving.
