Wealth advisers adapt as IPO windfalls create ultra-rich tech workers

A wave of large technology liquidity events is creating a new group of ultra-wealthy employees, and family offices are adjusting their playbooks for clients who may become rich almost overnight. Fortune reported that SpaceX is trading around $2 trillion, Anthropic is raising money at a $965 billion post-money valuation, and OpenAI is expected to follow, adding pressure on advisers to prepare for a busy IPO period.

Fortune also cited smaller offerings, including Jersey Mike’s and Bending Spoons, as part of the same rush. The result, wealth advisers told Fortune, is a compressed period in which employees who accepted equity while earning ordinary salaries may suddenly need tax, estate, investment and lifestyle planning.

Catherine Fankhauser, a partner and practice leader for family enterprise and family office advisory services at EY, told Fortune that people in this position often have little preparation for becoming ultra-high-net-worth investors. Fortune said the conversation with Fankhauser led to the half-joking label “IPO bros,” though advisers described the group as broader than any single nickname.

A different client base for family offices

Peter Epstein, a managing director at Allocate, told Fortune that the scale of current private-company valuations is what sets this period apart. He compared the moment with Facebook’s 2012 IPO at about $100 billion and said Google and Amazon went public in the late 1990s at much lower valuations.

Epstein told Fortune that more value is now being created before companies list publicly, giving private-company employees access to gains that earlier generations often saw only after an IPO. For employees, he said, even a nonexecutive role can produce a concentrated stock position once shares become liquid.

That concentration changes basic financial decisions, Epstein told Fortune. Advisers may need to help newly wealthy clients plan around liquidity, spending, retirement, tuition and the risks of having much of their net worth tied to one company’s shares.

Fankhauser told Fortune that the advisory system serving these clients has been built over the past five to seven years, helped by prior liquidity events and the SPAC boom. She said newer clients now have access to a more developed set of services than people who became wealthy 10 or 15 years ago.

Fortune reported that banks and financial firms have expanded internal family-office offerings such as technology support, accounting, bill payment and art advisory services. Fankhauser said employees who become wealthy through an IPO may be able to use those bundled services even if their payout would not warrant creating a single-family office.

New wealth may bring more risk-taking

Fankhauser told Fortune that advisers also have to account for the behavior of clients whose money comes from company-building or startup equity rather than inheritance. She said some founders and early employees may resist the structure that traditional family offices use to preserve wealth across generations.

Epstein told Fortune that employees at companies such as SpaceX, Anthropic and OpenAI may already have had chances to sell some stock through private-company tender offers. Even so, he said a public listing can mark a major financial and career turning point.

Both Epstein and Fankhauser told Fortune that these newly liquid employees may be less risk-averse than inherited-wealth clients and more likely to start companies, launch venture funds or build private-market platforms. Epstein pointed to Facebook’s IPO as an example of a liquidity event that helped seed a later wave of founders and investors.

For family offices, the challenge is to serve clients who need wealth-preservation tools but may not want a conventional preservation mindset. Fortune reported that advisers expect this group to shape both private wealth management and the next generation of startup formation.

This story draws on original reporting from Fortune.