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- Silicon Valley is about to see an influx of new cash, with a number of high-profile initial public offerings set for this year. Not everyone's equipped to manage all that new money, though.
- From forgetting to plan out their own finances before an IPO to handling their own complicated taxes, private bankers explain the six biggest mistakes new-money techies make.
- These errors can often be avoided by creating a game plan and putting together a team to execute it well before striking it rich.
Big money is about to hit Silicon Valley, and private bankers have spent the last months, and even years, preparing their soon-to-be wealthy clients.
The influx of wealth comes with plenty of opportunities, but also potential for big mistakes, from buying a money-sucking boat to failing to account for a huge tax bill. And as companies have stayed private for longer, executives have often delayed these big decisions. Now, with a spate of companies like Lyft, Uber and Pinterest poised to re-ignite the IPO market this year, private bankers say they're busier than ever.
Wealth advisers, many of whom have worked out of New York and San Francisco, say their conversations differ significantly in the Bay Area compared to the East Coast. The average founder is often younger than an East Coast client, which leads to different sets of concerns, including those around charity - some are keen to give, others couldn't care less - and family, because many don't have kids. Because they don't come from family money, clients may need a basic level of financial education. And half of one banker's clients are immigrants, some of whom do not plan to live in the US permanently, which leads to another set of considerations.
Business Insider spoke with six private wealth advisors, from both traditional and independent firms, to understand what executives are doing - or should be doing - to prepare for these huge changes.
To be sure, these advisers have a vested interest in how the new-money executives prepare, since they're coordinating the plan of attack. And getting in with a future unicorn early can mean big business, not just with that client, but with the executive's network of peers and investors.