More than 100 SpaceX employees with between $1 billion and $5 billion in combined assets have formed a collective to negotiate wealth management services ahead of the company's IPO. The group signed a deal with registered investment advisor Choreo at a fee starting at 0.5% that decreases as assets grow, according to CNBC reporting this week. The arrangement challenges traditional wealth management industry practices where clients are charged based on individual assets rather than collective bargaining power.
Choreo Structures Fee Model for SpaceX Employee Collective
Choreo CEO Jason Van de Loo described the SpaceX IPO as a rare opportunity to build relationships with clients whose wealth is about to increase significantly. "This is a unique transformational event," Van de Loo said. "We don't see events like this often. Most investors have decades to build wealth. When you get a moment like this, it's almost more like a large inheritance, or like winning a lottery ticket."
The size of the Choreo group will likely grow over time, and the option is being made available to employees of other firms that are about to IPO. Private banks, wirehouses, trust companies and other registered investment advisors are sending teams and hosting events in California, Texas and Florida in hopes of winning SpaceX employee business.
Advisors Address 90% Equity Concentration Risk
Jamie Battmer, chief investment officer of RIA firm Creative Planning, said the firm has dozens of SpaceX clients facing questions about whether to sell any stock. SpaceX equity represents up to 90% of many employees' wealth, Battmer said. SpaceX equity is typically granted in the form of restricted stock.
Employees tend to be deep believers in the future of the company and rarely want to sell any stock, according to Battmer. His firm is helping clients with tax-efficient indexing or other option derivative strategies. Clients are also seeking help with estate planning and philanthropy, including setting up charitable remainder trusts and donor-advised funds.
"Because it's a group of engineers, these are individuals who do a better job of dotting every 'i' and crossing every 't'," Battmer said. "But the vulnerabilities that come with just a seismic shift in your net worth are very dangerous and need to be navigated."
Engineers Apply AI and Whiteboarding to Wealth Decisions
Bill Dramis, a senior banker at J.P. Morgan Private Bank who works with high-net-worth executives and employees of aerospace and defense companies in Southern California, said engineers typically carry the practice of group problem-solving into wealth management. "Many of these people that we're meeting are incredibly intelligent and like to whiteboard examples with their peers," Dramis said. "That's how they've grown up and built their knowledge base."
SpaceX employees are also relying on artificial intelligence for wealth advice, according to advisors. Employees often come to meetings with recommendations from Anthropic's Claude or OpenAI's ChatGPT. "What's been interesting to us so far is we're finding creative ways to leverage AI as a part of those conversations," Van de Loo said. "I think naturally for this employee cohort, the first instinct is to go ask Claude, 'What should I do?'"
Van de Loo's team responds by evaluating AI output: "Here's where that output is valid, but here's where it might be a product-specific solution, not a planning solution," he said.
FAQ
What fee structure did SpaceX employees negotiate with Choreo?
The SpaceX employee collective signed a deal with Choreo at a fee starting at 0.5% that decreases as the group's assets grow. This differs from traditional wealth management where clients are charged based on individual assets.
What concentration risk do SpaceX employees face?
SpaceX equity represents up to 90% of many employees' wealth, according to Jamie Battmer of Creative Planning. The equity is typically granted in the form of restricted stock, creating significant concentration in a single asset.
How are SpaceX employees using AI for wealth management decisions?
SpaceX employees often come to advisor meetings with recommendations from Anthropic's Claude or OpenAI's ChatGPT, according to wealth advisors. Advisors then help evaluate which AI outputs are valid and which may be product-specific rather than planning solutions.
