The definition of wealth has shifted

If there’s any group in the technology industry already fully immersed in a red-hot Hot IPO Summer, it’s Silicon Valley’s top-tier elite wealth advisers.

Two private wealth managers who cater exclusively to high-net-worth tech clients told me they’ve already recorded a clear uptick in client activity, as many of their customers are preparing for major liquidity events this year. The upcoming windfalls are set to flow most heavily to employees and early backers of high-growth private giants like SpaceX, OpenAI, and Anthropic, who are poised to collect jaw-dropping, life-changing sums of money. (The wealth managers agreed to speak on the record but declined to name specific companies or clients, so any references to individual firms are my own additions, not theirs.)

It’s easy to default to imagining stereotypical splurges: superyachts, vintage air-cooled Porsches, and mountain vacation homes with closets stuffed full of Loro Piana luxury goods. But elite advisers say most of their tech clients take a surprisingly strategic approach to newfound wealth before splurging on big-ticket items, snapping up premium real estate, or dumping cash into viral meme stocks. (A small share still jump straight to the lavish purchases, of course.)

Ashley Velategui, head of wealth strategies at Bernstein Private Wealth Management, has advised high-net-worth individuals across Seattle and the Bay Area for nearly 20 years. She says she encourages her tech clients to first calculate exactly how much “core wealth” they need to lock in permanent financial independence before making any rushed moves with their equity. She also reminds clients that a balance sheet dominated by a single company’s stock—for example, SpaceX—can swing dramatically in value over time.

Brittany Boals Moeller, who leads Goldman Sachs’ West Coast wealth management division and relocated to the Bay Area last year specifically to serve the booming tech client base, notes that overall “the pace and the scale of wealth creation seems faster than it’s ever been before.” From her perspective, “a huge share of our work right now is pre-IPO planning.”

Here are the most notable insights I gleaned from my conversations with the two advisers:

The definition of wealth has shifted

Velategui says there is far more ambiguity today around how tech insiders define high or ultra-high net worth. A generation ago, anyone with $25 million to $30 million in assets was considered mega-rich. Today, her average client already holds somewhere between $20 million and $100 million in total assets.

Velategui adds that clients are also exploring creating dedicated “family offices”—small private firms that manage a wealthy family’s full portfolio of assets and affairs—far earlier in their wealth journeys than previous generations. Her ultra-high-net-worth clients now regularly set aside $25 million just to launch a family office, a clear sign their total net worth stretches far beyond that threshold.

Lock-up periods are tricky to navigate

“Hot IPO Fall” doesn’t have the same catchy ring as “Hot IPO Summer,” but the reality is that most employees and early investors cannot cash out any of their shares until the mandatory post-IPO lock-up period expires. The rule exists to protect new public companies from destabilizing oversupply of shares hitting the market at once, and most lock-ups last 180 days.

Even for the increasingly common “staged” lock-up arrangements that let shareholders sell tranches of their stake over time, Velategui urges employees to proceed with caution. Phased selling adds extra layers of complexity, because there are more sell windows to plan for, and the entire liquidation process requires far more active management.

Tax minimization remains the top goal

Cashing out shares can trigger a massive tax bill, so wealth managers have developed a range of sophisticated strategies that let tech clients access and spend their wealth without selling their equity immediately.

Velategui outlines a few popular approaches her clients use, including variable prepaid forwards, short box spreads, and borrowing money against their share holdings held at brokerages.

“The strategy that comes up most frequently in this community right now is variable prepaid forwards,” she says. With this approach, a shareholder enters a contract with a financial institution to receive an upfront, tax-deferred payment for their shares, and agrees to transfer the shares to the bank at a set future date. These strategies are not without risk, and they still face regulatory tax scrutiny—but what is Silicon Valley if not unapologetically tolerant of calculated risk?

Wealth managers have to prove they’re better than AI

“People are coming to us with more information and more targeted questions than we’ve seen at any point in the last 5 to 10 years, and a lot of that is because of their easy access to AI tools,” Velategui says.

Boals Moeller adds that while many clients now do their own preliminary research using AI chatbots and finance podcasts, human advisers can deliver nuanced guidance that is not available in public knowledge. Goldman Sachs has even expanded into full-service concierge work for high-net-worth clients, connecting them with private aviation access, top medical specialists, physical and digital security services, hard-to-get event tickets, and even education consulting for their children.

Claude can’t do all that. Not yet, anyway.

Clients are encouraged to invest in what makes them happy

Silicon Valley’s wealth ecosystem has a unique flywheel effect: when founders and early employees earn a major windfall, they often reinvest that capital into other startups or launch new ventures of their own. Given that the majority of venture-backed startups fail, this is not always the most financially rational use of new wealth.

Boals Moeller works with many clients who direct a large share of their wealth into backing new startups, and a core part of her role is helping clients unpack “what the money really means to them.”

“Sometimes they want to grow it as much as possible to give it all away. Sometimes they want to leave their children a permanent family home. Sometimes they just want to enjoy their new life, and sometimes they want to launch a new business,” she says. “We take the view that our clients should pursue exactly what they want for their next chapter, and we build their entire portfolio around that goal.”

Philanthropy is trending heavily

Boals Moeller says this new generation of tech wealth holders is particularly focused on “dramatically giving back” through large-scale philanthropy.

Velategui has noticed that ultra-wealthy clients now often give their children small dedicated grantmaking funds—for causes ranging from animal welfare to climate action—to teach them to be responsible stewards of wealth. Recently, a top AI executive told me he believes this new era of philanthropy will be far more “pro-social” than previous waves of giving, a framing that implicitly casts older generations of philanthropists as more self-serving than today’s new donors.

Of course, philanthropy has long been a popular vehicle for wealthy households to reduce their overall tax burden. But amid widespread public uncertainty, anxiety, and economic disruption caused by the AI boom for ordinary people, strategic philanthropy could also help this new class of tech leaders win back much-needed public goodwill.

This is an edition of Steven Levy’s Backchannel newsletter. Read previous editions here.