New SpaceX millionaires are reinventing the business of managing large wealth

A wave of newfound wealth among SpaceX employees is reshaping the landscape of wealth management. Following an anticipated IPO, over 100 employees with combined assets ranging from $1 billion to $5 billion are collaborating to secure more favorable terms with wealth management firms. This collective effort has led them to partner with the registered investment advisor Choreo, which offers a competitive fee structure starting at 0.5% that decreases as their combined assets increase. This innovative approach marks a significant shift in the wealth management sector, which typically bases fees on individual client assets. Jason Van de Loo, CEO of Choreo, emphasized the rarity of such an opportunity, likening it to receiving a substantial inheritance or winning a lottery. He stated, "This is a unique transformational event. We don't see events like this often. Most investors have decades to build wealth." The group is expected to expand, with options for employees from other upcoming IPOs to join. As the competition to manage this newly liquid wealth intensifies, various financial institutions are mobilizing to win over these high-net-worth clients through events in California, Texas, and Florida. Jamie Battmer, chief investment officer at Creative Planning, mentioned that many SpaceX employees are faced with a critical decision regarding their equity, which often constitutes up to 90% of their wealth. He noted, "Advisors typically recommend diversifying, but SpaceX employees tend to have a strong belief in the company’s future and are hesitant to sell." Battmer's firm is assisting these clients with strategies for tax efficiency, estate planning, and philanthropy, including charitable remainder trusts. Despite being highly skilled, many SpaceX employees are navigating the complexities of wealth management for the first time. Battmer pointed out, "The vulnerabilities that come with a seismic shift in net worth can be dangerous and need careful navigation." The engineering background of many SpaceX employees influences their approach to financial challenges. Bill Dramis from J.P. Morgan Private Bank highlighted their tendency to engage in group problem-solving, saying, "They want to tackle wealth creation and charitable planning collaboratively with peers." Interestingly, SpaceX employees are also utilizing artificial intelligence in their financial discussions, often coming to meetings equipped with insights from AI tools like Anthropic’s Claude or OpenAI’s ChatGPT. Van de Loo remarked on the innovative use of AI, stating that employees are keen to incorporate these insights into their wealth management strategies. Ultimately, SpaceXers are seeking advisors who can provide education and guidance tailored to their unique circumstances. Dramis affirmed, "We are here to advise individuals who are encountering these wealth dynamics for the first time, helping them evaluate scenarios and trade-offs effectively."