Young, rich tech engineers are investing their millions differently than the rest of us
Even though they are flush with cash they likely made in just a few years, they have a distrust of risky investments and of opportunistic wealth managers CNN Money reports.
More than anything, they want to see the data and charts for themselves.
Darrell Krasnoff, a managing director at Bel Air Investment Advisors, tells CNN Money that just-minted tech millionaires tend to be more engaged than typical entrepreneurs.
"They come to us with an engineer's approach, so we go deeper with the amount of information we give them. We show them more data, charts and graphics to show what's possible," Krasnoff told CNN Money. He says his clients invest mostly in stocks but also keep a smaller portion of their cash handly so they can invest it in their or their friends' next startup ventures.
But many of the wealthy tech executives are forgoing traditional wealth management altogether, and moving to online systems like Wealthfront, the world's largest automated investment service, which reports over $2.5 billion managed assets.
Startup co-founder Cemre Gungor, who sold his company to Facebook, explained it in this way to Reuters:
"My personality doesn't lend itself to being the sort of person who would research good wealth managers and then trust them with making decisions. I don't want to spend any time thinking or caring about that."
The bulk of Wealthfront's customers are millennials and many come from Northern California's tech mecca. CNN Money reports that Apple, Google, Facebook, Twitter, Amazon, and Microsoft are all represented.
Wealthfront's CEO Adam Nash told CNN Money that millennials don't think they can beat the market. There isn't an unreasonable sense of optimism one might think an incredibly rich young person could have about the market. They have lived through two crashes and want safe investments along with diversification. And they are realistic in their expectations.
This echoes certain facts we have begun to hear about millennial investors in general. According to a survey done by Goldman Sachs, almost 40% of young people do not want to invest in the stock market at all, and another 45% say they want to play it safe by investing small amounts or using risk strategies.
These new tech millionaires aren't so different. They don't want you to try to sell them on reaching the stars. They just want to calmly build their nest eggs.