A Group of SpaceX Employees Seeks Better Financial Terms

A group of over 100 current and former SpaceX employees has come together to create a new low-fee wealth management option with Chicago-based Choreo. This bold experiment in the wealth management industry aims to challenge the traditional fee structures set by advisory firms.

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The employee group represents a potential wealth of between $1 billion and $5 billion, according to sources familiar with the agreement. This collective wealth is a result of their post-IPO windfalls from their shares in the rocket company. The group has been actively discussing philanthropy and has shared advice on how to use their wealth to give back to their communities.

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The employees, who were paid below-market salaries in exchange for stock, have never had to manage large sums of wealth before. By joining forces, they hope to be able to devote more of their fortunes to philanthropy. Some members of the group are considering creating scholarships and funding for colleges and universities where they were trained and educated, while others want to fund new programs that give children better access to engineering, science, and math programs.

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The deal with Choreo marks a significant shift in the balance of power from advisory firms to wealthy groups of investors. By negotiating a long-term agreement with Choreo, the SpaceX employees and alumni employees are securing better terms than what is typically offered by wealth management firms. The minimum annual fee or annual management fee is under 0.5% of assets under management, which could undercut the industry standard of between 0.5% and 1%.

Choreo, a registered investment advisor, has more than $28 billion in assets under management and advisement, with over 40 offices and 200 wealth advisors. The company’s fee structure is designed for long-term agreements, rather than one-time promotional offers. The deal with the SpaceX employee group is a testament to the unprecedented power of the SpaceX IPO and the collective financial scale of the group.

The agreement also highlights the growing trend of collective wealth management options. Employees of other companies, such as Anthropic, which recently filed confidential plans to go public, are also in discussions with advisory firms about a potential collective option. This shift in the wealth management industry could have significant implications for the way advisory firms operate and the fees they charge.

The SpaceX employees’ decision to create a low-fee wealth management option with Choreo is a bold experiment in the wealth management industry. It challenges the traditional fee structures set by advisory firms and highlights the collective financial scale of the group. As the industry continues to evolve, it will be interesting to see how this deal and others like it shape the future of wealth management.

While the details of the agreement remain confidential, the impact of the deal is clear. The SpaceX employees and alumni employees have secured better terms than what is typically offered by wealth management firms, and the deal has the potential to shift the balance of power in the industry.