SpaceX employee group seeks lower wealth fees after IPO
More than 100 current and former SpaceX workers have arranged a lower-cost advisory option with Choreo, CNBC reported.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
A group of more than 100 current and former SpaceX employees has banded together to seek lower-cost wealth management after the company’s planned public debut, CNBC reported. The arrangement matters because it shows how newly wealthy employees from a major IPO can use their combined assets to press for better financial-advisory terms.
The group created a new advisory option with Choreo, a Chicago-based registered investment advisor, according to people familiar with the agreement who spoke to CNBC on condition of anonymity. CNBC reported that the group represents between $1 billion and $5 billion in potential wealth.
The effort began as an informal online forum centered on philanthropy, CNBC reported. It later grew into a broader push to get more efficient access to financial advice by pooling the scale of members’ post-IPO stock wealth.
A small team acting for the SpaceX group reviewed possible advisory firms and helped set up the Choreo option, CNBC reported. Members can choose whether to participate.
Choreo says on its website that it has more than $28 billion in assets under management and advisement, more than 40 offices and 200 wealth advisors. CNBC reported that Choreo did not immediately respond to a request for comment.
Lower fees than common advisory rates
The specific terms of the SpaceX employee arrangement remain confidential, according to CNBC. People familiar with the deal told CNBC that the structure includes either a minimum annual fee or an annual management fee below 0.5% of assets under management.
CNBC reported that a fee under 0.5% would be below the common industry range of 0.5% to 1%. The people familiar with the agreement said the Choreo pricing is tied to a long-term agreement, not a short-term promotion.
Wealth management firms often price services based on the assets of an individual client or family, with rates commonly falling as investable assets rise. The SpaceX group is testing whether employees and alumni from one company can use their combined wealth to win terms usually associated with much larger clients, CNBC reported.
Philanthropy is part of the plan
SpaceX, led by Elon Musk, is set to begin trading on the Nasdaq on Friday under the ticker SPCX, according to CNBC. The IPO is expected to create many new millionaires among employees who received stock as part of their compensation.
Many SpaceX employees, including engineers, accepted below-market pay in exchange for equity, CNBC reported. People familiar with the group told CNBC that many members have not previously had large fortunes to manage.
Lower advisory costs could leave more money available for giving, according to people familiar with the group’s discussions. CNBC reported that members have shared ideas and contacts for philanthropy, including scholarships for colleges and universities they attended and programs aimed at expanding children’s access to engineering, science and math education.
The model may spread beyond SpaceX. Employees at Anthropic, which recently filed confidential plans to go public, are also talking with advisory firms about a possible collective wealth-management option, people familiar with those discussions told CNBC.
This story draws on original reporting from CNBC.