Silicon Valley’s Elite Financial Advisors Say This Financial Season Is Different

If someone in tech has already started the Hot IPO Summer, with Silicon Valley’s top financial advisors.

Private equity managers who work with high-cost technologies told me they’ve seen a lot of activity from their clients, some of whom are anticipating a big event this year. We are talking, of course, about workers and early investors at SpaceX, OpenAIand Anthropic who are coming into a mind-boggling economy. (These wealth managers agreed to speak on the record but did not name specific companies, so my words are mine, not theirs.)

Visions of luxury yachts, air-cooled Porsches, and vacation homes with shutters filled with Loro Piana probably come to mind. But elite advisors say many of their clients have a good idea about their new finances before buying big-ticket items, buying real estate, or investing in stocks. (Some go even bigger.)

Ashley Velategui, head of financial strategy at Bernstein Private Wealth Management, which has been providing guidance to high-net-worth individuals in Seattle and the Bay Area for nearly 20 years, says she encourages tech clients to determine how much “average wealth” they’ll need to be financially independent before taking the plunge. They should also consider that a paper with a lot of money, like, SpaceX, can change a lot over time.

Brittany Boals Moeller, who oversees Goldman Sachs’ wealth management division on the West Coast and moved to the Bay Area last year to help more tech people, says “the speed and volume of wealth seems faster than ever.” As he sees it, “a lot of what we’re doing is advance– The IPO is being prepared now. “

Here are some things I learned from my discussions with them:

The meaning of wealth has changed. Velategui says there is a lot of misunderstanding in how the technical community defines the value of higher or higher. The super rich used to be anyone with a pot of $25 million to $30 million, but today his average client is worth between $20 million and $100 million.

Velategui adds that clients are thinking about creating a “family office”—a small business entity that manages family wealth and assets—earlier than ever. His high-net-worth client is now setting aside $25 million to build a family office alone, which means all of their wealth extends beyond that.

“Closed periods” can be difficult to navigate. “Hot IPO Fall” doesn’t sound like “Summer,” but the reality is that many investors and early stage investors can’t sell their stock until after the IPO close. This is to protect the market from destabilizing oversupply of stock; In most cases, the lock-in period lasts 180 days.

Even if it is closed “on the steps”, workers are encouraged to act with caution, says Velategui. These shares cause a lot of problems because there are many points that a stockholder can sell, and the withdrawal process requires a lot of control.

Reducing taxes remains the goal. Selling shares can come with a large tax liability, and asset managers are coming up with all kinds of sophisticated ways to allow their professional clients to spend their money without selling their shares.

Velategui removes several options for its customers, including prepaid transfers, short box spreador borrow money from their mortgage company.

“What seems to be coming up more and more frequently in this area is pre-paid,” he says. With this method, the seller enters into an agreement with the financial institution to receive a high, taxable payment for their shares, and agrees to deliver the shares to the bank at a future date. These strategies aren’t risky — and they’re tax-controlled — but what is Silicon Valley if it’s not insanely risk-tolerant?