Financial Planning for OpenAI Employees: Equity, IPOs, and Concentration Risk

Speaker 1 – 00:00
If you are an employee at OpenAI, There’s a lot to balance, both financially, psychologically, mentally, as far as what
you should do in your financial planning. OpenAI was the front runner of large language models, chatbots, artificial
intelligence. They have a great program where the employees have a lot of stock and upside. But at the same time
that creates a lot of stress because your day to day is chaotic. The first decision point is when this tender window
opens up, what are you going to do? And then second thing would be an ipo, which we’ll talk about.
Speaker 2 – 00:29
You may want to have a number in mind. And what I mean by number is like, what’s my dollar amount? Where I feel
like I’m comfortable. It’s really important to have this in place before the tender window opens because it’s the best
defense against any rash.
Speaker 1 – 00:41
Decisions you probably have found yourself in is 90% or more of your net worth is tied into this single company.
Stock concentration is really great for wealth creation. It’s really bad for keeping and maintaining your wealth.
There’s strategies, whether that’s direct indexing, whether that’s a long, short strategy, charitable giving into a
donor advised fund, a family foundation, all these things need to be considered. And there are strategies that you
can put in place to offset. If an advisor tells you, oh, just like sell everything, they might just want the assets to
manage. But if you have someone that’s candid enough to be direct and tell you, hey, I think you should only sell
20%, that’s in your best interest, that’s the type of relationship you want. If you are an employee at OpenAI, There’s
a lot of balls up in the air right now.
Speaker 1 – 01:31
Whether it’s an ipo, what’s going on internally with the company, what’s going on externally in the headlines, there’s
a lot to balance, both financially, psychologically, mentally. As far as what you should do in your financial planning,
do you sell your stock? Do you keep your stock? What’s the right amount? And we’re going to unwind. We’re going
to go through how to unwind and unpack. All of that in a prudent way that aligns with your financial goals and ties
you into the upside of the company while still making sure that your goals are on track. Today I’m joined by Tyler.
Speaker 1 – 02:01
We’re going to do a deep dive on OpenAI employees, what their compensation looks like, what their stock program
looks like, and some strategies that can be used to help navigate this chaotic situation that you might find yourself
in both with what’s going on in the company with what’s going on externally, what’s going on in the AI marketplace,
and then how you tailor that to your own financial planning to make sure that it’s on track no matter what happens
within the company or outside or in the AI industry at all. So if you’re an employee there, you have a lot of stock,
most likely, and you want to make sure that your family’s financial goals and plans are secured while also still
participating in the upside of the company. So there’s a dichotomy there, kind of competing with two goals,
competing with each other.
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Speaker 1 – 02:49
So, Tyler, why don’t you give us just general overview of what we found working with people within this specific
company and why it’s so important right now.
Speaker 2 – 02:58
Yeah. Thanks for the introduction. Jameson, you bring up a couple good points. I think it makes sense to spend
some time covering, lay the landscape for everybody. Everyone’s probably feeling the exact same things, talking
about the same stuff. I think it makes sense to take a step back. You’re probably in all of these group chats going
through the stock’s going to the moon, valuation’s going crazy. But I think we all need to take a step back and just
build a planning out first. I think it makes sense to take a deep breath, think about the pros and cons of keeping the
equity and how much you want to keep.
Speaker 1 – 03:36
So I think if we. Yeah, that’s, that’s all good framing. I think if we take a step back and look. So if we look at the
biggest wealth creation eras and vehicles in America, you really have post Civil War america from like 1965 on to,
like the Great Depression up to, you know, the 1920s. You had the Industrial Revolution, railroads, steel, and there’s
this massive wealth creation opportunity. And we’re starting to see that again. And this is just like objectively true
of when was the most wealth created in America? That was it. And we’re at a point now with AI that’s going to be
replicated and maybe even beaten with the amount of wealth that can be generated with this new technology.
Speaker 1 – 04:20
And if you’re at OpenAI specifically, or any of these companies, we’re talking specifically about OpenAI, you’re at
the epicenter of this wealth creation era in America. OpenAI was the, I guess you could say front runner of large
language models, chatbots, artificial intelligence. And you have this private company that’s created all this wealth.
They have a great program where the employees have a lot of stock and upside. But at the same time that creates
a lot of stress because your day to day is chaotic. You know, you’re working 12, 14 hour days, you don’t have a lot
of time to take a step back and reflect. But what we found the most beneficial is set some time aside and really
think about what’s important to you and your family.
Speaker 1 – 05:08
What are your values, what goals do you want to make sure are secured no matter what? And that’s going to drive
the whole financial planning. So it’s really easy to get caught up in the psychological side of this stock or
companies going to the moon because it probably is. This is a crazy tech wealth creation vehicle. But you need to
do this with stripping out emotions. Look at this objectively and how do we make sure that this is on track? So first
thing we’ll dive into is how the equity structure works. We found it really common too. When wealth’s created as
quickly as this has happened, you might not have had the time to take a step back and understand what is actually
happening with your equity. So just lay the land.
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Speaker 1 – 05:58
The equity is in what’s called a ppu, so similar to an rsu, but it’s essentially like a profit interest. You’re getting
profits on forward looking growth of whenever the stock was granted. So these PPUs happen in tranches, they
have a vesting schedule, they have a grant date and they’re going to start to vest over the years. The longer you’ve
been there, they’ll start to vest on a monthly basis. And so as these become vested, you can’t just go sell them
immediately. You have to wait for one of the tender windows to happen, which generally has been at least once a
year. And then the company gives you the option to sell out what stock you have available that’s vested. So when
that happens, your basis on this is zero.
Speaker 1 – 06:42
Because of the way that the equity is structured in the form of a profit interest basis is zero. You don’t pay taxes
when it’s granted. You don’t pay tax on invested. You only pay capital gains taxes when you sell it bearing that
you’ve held it for over a year. So there’s no tax consequences until you decide to tender it. And that’s, I would say
the first decision point is when this tender window opens up, what are you going to do? Are you going to, did you
sell before? Are you going to sell now? And then second thing would be an ipo, which we’ll talk about. So Tyler, as
we’ve seen, if a tender window is Coming up, what needs to be true, what are some things they should think about,
and how do we want to planning around this?
Speaker 1 – 07:24
Because that’s probably the most important thing is have a planning before the tender window opens up so that
you’re not caught off guard, fire, sailing, trying to figure out what to do when your back’s against the wall. So what
should they be thinking about? What’s important?
Speaker 2 – 07:36
Yeah, I think the most important thing is having a number in mind. Right. Because historically, you’re just looking at
the stock price on a piece of paper and it doesn’t mean anything. But as soon as you hear about a tender window
one, it may already be too late. You may want to have a number in mind. And what I mean by a number is like,
what’s my dollar amount? Where I feel like I’m comfortable, I can take care of my family, I can have education
funded, I can buy the house I want. So I think it’s important to have the quote, unquote number in place before the
tender window opens. So how you would come to this number? Well, it depends, like, what are spending habits,
what are your goals? When do you want to retire?
Speaker 2 – 08:16
Someone that wants to retire at 30 is going to have a much different number than someone that wants to retire at
60 and wants to keep working. So the number can be, you know, what is it a sale price? Right. Is the company
valued at a trillion dollars and we want to sell now? Is it a dollar amount that I have individually? Is it a percentage
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of my holdings? Is it a list of goals that I want to make sure I have met and then sell? And it’s really important to
have this in place before the tender window opens because it’s the best defense against any rash decisions. Once
that tender window opens, it’s probably really hard to be like, all right, here’s 10 million bucks hitting my account
and then letting it sit in cash for the next eight months? Right.
Speaker 2 – 09:00
You want to have a planning in place so that when the tender window does open, you’re not just scrambling.
Speaker 1 – 09:06
Yeah, for sure. I would. So how we want to go with that number, we want to reverse engineer this so we think about
who is working in AI at these companies. Sure, there’s some outliers, but it’s generally not 60 year olds. It’s younger
people in their 20s, 30s, 40s. They’re kind of who’s up to date with AI, knows how to use this tech, and they’re
working in these companies. So with that in mind, there’s, I would say, some common Things that you want to keep
in mind. Number one, if you have children, is education planning important. So let’s figure out what’s the
philosophy and goals for that. How much do you want to cover? Do you want to cover it at all? How much do we
need set aside to do that? And maybe that’s $250,000. Now you invested it grows.
Speaker 1 – 09:56
By the time they’re 18, maybe it’s $750,000. Reverse engineer that to whatever type of college. How much you want
to cover, that’s simple arithmetic. We can figure that out pretty easily. Second thing would be what other short term
goals do you have? Do you want to buy a house? Do you want to help out family? Do you want to pay off debt? Do
you want to do any of these things are in the short term, what does that look like? And let’s carve off a number for
that. And then the third thing would be financial independence. So you mentioned when do you want to retire? I
would say a lot of it is, you know, especially if you’re young, it’s. That’s hard to rationalize. Like when do I want to
retire? I don’t, I don’t know.
Speaker 2 – 10:34
I’m 30, 40 years old.
Speaker 1 – 10:38
Like that’s a long ways away. It’s more. So when do you want to have optionality of, okay, I’m financially
independent, I can keep working here if I want to, or if something goes south, I can pick and choose. I could get out
of the industry completely. I could go work for another company, I could do consulting, whatever that looks like.
And so we want to kind of reverse engineer around. Those three things would be like short term goals and then
financial independence, any other goals. And so we’ll come up with a number. Maybe it’s $10 million, $10 million is
our floor that we need to get to accomplish whatever those goals are. Financial independence, education, planning,
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whatever that happens to be buying a second house, who knows.
Speaker 1 – 11:18
And so that’s what we’d kind of look at is let’s come up with a planning over the next however many years, three to
five years to hit that floor so that no matter what happens with the company, all of those goals are achieved, but
you still have some that you’re participating in the upside. So we want to separate into buckets of, you know,
bucket. One would be our financial security, financial independence, whatever those goals are that needs to be out
of the company and invested, either short term cash or a diversified investment strategy that if something
happens with the company, the Industry, the market. Your whole planning is not thrown off. And I want to have a
bucket. We would call it. We can really call it whatever you want. Home run money, speculative money, moonshot
money. That’s keeping this in the company.
Speaker 1 – 11:59
And we’re letting this ride. We know that we have enough chips off the table to cover everything, and we’re letting
that run so that we can participate in that upside while still having our goals on track. So those would be. That’s
kind of the general framing, I would say. But what you probably have found yourself in is 90% or more of your. Of
your net worth is tied into this single company stock. And that’s really. Concentration is really great for wealth
creation. It’s really bad for keeping and maintaining your wealth. So concentration is how people get rich.
Concentration’s absolutely not how people stay rich. Because as quickly as you can get rich is just as quickly as
you can lose it. So that’s kind of the general framing that we would.
Speaker 1 – 12:42
We would have anything to add on how we want to figure out those goals?
Speaker 2 – 12:47
No. Yeah, I think. I think you’re bringing up some good points. I think the only thing that I would add is the bucket
strategy. It’s. It sounds really simple, but at the end of the day, you’re just removing. Removing emotion out of it.
Right. Like, I can’t tell you how many times we’ve talked to clients, and it’s like, why have all this money sitting here?
And it’s like, yeah, but if you just take that off the table, you don’t ever have to worry about the money that’s on the
table anymore. You can just take it off. And we’ve probably brought this up another podcast, but it’s like, think of
the third bucket or the. The moonshot bucket, if you would, is like a free roulette spin. Like, we’ve taken care of
everything else.
Speaker 2 – 13:19
You walked into the casino and got a couple free bucks, and if it hits, great.
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Speaker 1 – 13:23
If it doesn’t, you’re still okay.
Speaker 2 – 13:24
We’re fine. You don’t have to stress about it.
Speaker 1 – 13:25
Yep. And a lot of. One of the big driving factors I want to include is you need to be really aware of what your
spending is. And we have some strategies to figure this out. But you got to have a number on, like, okay, I’m
spending 2000-002503-00000 a year, and that’s probably being covered by cash compensation now, maybe
spouse’s compensation as well. That number is going to drive your entire financial independence bucket and
obviously add in College, whatever that is too, other goals. But that number, if you don’t know what that number is
and you planning for 200,000 a year, but you’re really spending 400, like that gets thrown way off. So that’s one of
the biggest drivers in determining all of this. But what would you say is what’s the biggest. Like if you think, just
think about concentration risk.
Speaker 1 – 14:14
If you keep, if you do nothing and you keep 95% of your net worth in this stock, like what’s the downside?
Speaker 2 – 14:21
Number one is you don’t have that anymore. Right. Like, I mean we all think AI is here to stay. And the OpenAI is a
great example of like a company that was kind of front running all of it. But what if it wasn’t there? Do you, do you
really want to watch that account just essentially get deleted off the face of the earth?
Speaker 1 – 14:36
Yeah, that’s. We have countless stories of concentration risk that has worked out poorly and worked out well and
doesn’t matter. The company. You could be the biggest Ms. Sound company in the world. One event could happen,
a black swan event that could wipe a single company off the maps. Like if you look at The S&P 500, for example,
do you know what the biggest company in the S&P 500 was 25 years ago?
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Speaker 2 – 15:01
I don’t, James. And what was it?
Speaker 1 – 15:02
General Electric. Is General Electric around now? It is. But is it nearly as big? One of the biggest companies? No.
Now all the big companies are tech companies. Did Apple exist 50 years ago? No. So these things are cyclical. And
what comes in and out of the S and P. The lifespan of AN S&P 500 company is slowly decreasing. It was 12 years.
Now it’s about seven years. So like industries change, the economy change, humans change that those companies
cycle in and out. So what is number one right now? I promise you, 50 years from now, that company not only might
not exist, but it’s probably not. It very likely could not even statistically. It will not be in the S&P 500. And we’re
talking about publicly traded companies, but big private companies.
Speaker 1 – 15:44
That’s a lot of times the goal is to IPO and be included, be.
Speaker 2 – 15:47
Public and be included in the index. You’re right.
Speaker 1 – 15:49
So concentration risk is a real risk if you don’t have a good strategy to get out. So let’s. Anything else to add on?
Like preparing for a tender window, how much to sell, how much not to.
Speaker 2 – 16:03
Yeah, I don’t Think we really touched on this, but I think something important, we kind of talked about the taxes, but
when you’re going through the tender offer process, it probably makes sense to model out different sale prices in
different tranches that you’re going to sell. Whether that’s working with your cpa, working with us at ewa, it
probably makes sense to mark out like, what does my tax situation look like if I sell it? A million dollars of this
tender offer. 5 At IPO, 10 at IPO. You probably should have that. It’s hard to have a planning because you don’t
exactly know what the figure is going to be, but you really should take some time and have some projections in
place where, what is my tax situation going to look like if.
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Speaker 1 – 16:41
Yeah, so it’s all going to be capital gains taxes, like we said. And so there’s strategies, whether that’s direct
indexing, whether that’s a long, short strategy, charitable giving into a donor advised fund, a family foundation. All
of these things need to be considered. And there are strategies that you can put in place to offset that. So one idea
would be, okay, if you’re young and we have our financial independence bucket that we know we’re not touching for
10 years, maybe we take some of the tender, we sell it out, we know we’re gonna have to pay taxes on that portion,
but we put it in like a long, short strategy and we take 5 million bucks and we put it in long short. We’re harvesting
losses for the next 10 years. We’re not touching that money.
Speaker 1 – 17:24
We just did a whole podcast of long, short. If you want all the ins and outs and mechanics, happy to share it’ll be
posted, but that will harvest a bunch of losses you’re not going touch. And then those losses that generates can
offset your future sales and tender sales or post IPO sale, offset those capital gains with that bucket that you’re
just leaving sitting there. Same thing with direct indexing. Longshore is a little bit more powerful. And then if you’re
charitably inclined, big opportunity to donate tax deductible. So yeah, taxes are definitely a huge consideration.
And don’t be. We’ve seen people get really sticker shock, like they haven’t done these models and then they go to
sell and they’re like, wait, I owe what in taxes? $500,000 In taxes? Like, I wasn’t prepared for this. Like, yeah, you got
to.
Speaker 1 – 18:13
Just because you’re selling it and getting $1 million in cash. Doesn’t mean you’re getting a million dollars. You
know, 25% in the state of California, you’re going to pay state taxes. Probably closer to like 50% is going to go to
taxes. So you got to be aware of that. The next thing I want to talk about is. So it’s kind of two strategies. One is
while the company’s private and you have the tender windows and there’s a whole nother framework. As far as an
IPO, so widely talked about with OpenAI and other AI companies, you know, will there be an IPO push in the next
like 12 months? Everything that I know I’m reading, yes, probably, very likely. That’s a little bit of a different
framework. So once the S1 is filed with the SEC to go public, nobody can sell any stock.
Speaker 1 – 19:02
So, you know, there may or may not be a tender window before that. Generally, companies, when they ipo, they
don’t want their employees to be super stressed about the stock price to be able to focus on their work during the
IPO. So oftentimes in past IPOs, there’s a window where they can sell out before that S1 is filed. So if that happens,
you have an opportunity, you’re gonna have to make a decision how much is gonna alleviate stress to sell out tied
to all those goals that we talked about. You wanna planning around, but once that S1’s filed, you’re not, there’s a
lockup, you’re not touching it. And then once the IPO happens, you can’t just on IPO day just go sell. There’s usually
a 90 to 180 day lock. So that’s going to be.
Speaker 1 – 19:46
If you don’t sell anything up until then, that’s going to be pretty stressful and emotionally tough. As you’re watching
this stock price, like after an ipo, the stock price, and there’s a lot of data on this, it’s going to be very volatile, even
if long term ends up going up. But generally there’s like a big spike, then it drops and there might be another spike
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and it’s going to be all over the map. And if you haven’t taken chips off the table and you’re just like watching that
happen, it’s going to be really stressful. So with the IPO framing, couple of things to be aware of, I like to set a
framework before that happens, of, okay, like you said, let’s remove emotion off the table. Let’s look at this
objectively. What percentage we really start the framework with.
Speaker 1 – 20:30
We have that floor that we need and then what percentage of our net worth do we want tied in the stock? It’s not
90 usually. So it’s how do we get to 70 to 50 to 30, whatever those frameworks are. But if we fast forward three to
five years and under, 30% left in this stock is usually a good rule of thumb, but that’s dependent on goals once that
IPO is filed. One strategy, this is very common with executives. You might not have to legally publish this, but so
what’s called a 10B51 planning. So this is common with executives where they legally have to disclose their selling
philosophy.
Speaker 1 – 21:11
But it’s a good thing even if you don’t legally have to do that, having this framework and kind of doing it de facto
just because it’s saying, you’re saying, hey, this is my strategy and I’m not acting on insider information. So if you
have this planning of, okay, pre IPO, this is 80% of my net worth within one year of the IPO, I want to get this down
to 60%. Within year two, I want to get this down To 40%. Within year three, I want to get this down TO 30%. No
matter what happens with the stock price bearing it like, you know, something happens, goes down 80%, you’re
going to wait for it to come back. But in general, no matter what happens, I’m going to have this planning to sell
over the next, you know, 12 to 36 months regardless.
Speaker 1 – 21:51
That will help hedge against any like insider trading if you know, you’re not going to get dinged for insider trading
because you have this pre thought out planning. So that’s one strategy. But I would say in general with the IPO is
like you got to have a planning before it happens. Because if you wait and do nothing, it’s going to be really
stressful, volatile, emotionally hard to deal with. So anything to add on the IPO framing?
Speaker 2 – 22:17
I don’t think anything that we haven’t already covered, like you kind of mentioned, we mentioned it probably five
times early. Having a planning in place if we have the tender window before, great. Based on my research and the
rush to get the IPO going for OpenAI, I wonder if you’re not going to have that window open. So that will obviously
change things slightly. But at the end of the day, like I said, have a planning in place, I would just be cognizant of
maybe there isn’t a tender window. If there’s a big rush to, if.
Speaker 1 – 22:48
There’s not what that would look like. So we’re you know, this is May of 26. Let’s say the S1 gets filed and I’m totally
making this up, this is all speculation in July and there’s a tender window. The IPO happens in the fall or end of the
year and then you’re now looking at a 90 to 180 day lockup. You may be in a position where you cannot liquidate
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anything for like a year from now. That’s a likely scenario if there’s no tender window.
Speaker 1 – 23:17
So even if there’s no option to sell anything now, you should still have a planning in place that the minute that
window opens up where the IPO lockup’s done and you’re able to sell, you have a pre thought out planning that
you’re not just, you know, at that point you’re probably, if you have no planning, you haven’t thought of anything in
that, let’s say a year from now you have stock vesting and you can’t sell until then. You’re going to be acting from a
place of emotion and stress, fear and stress, I guess, versus abundance of I have this planning. You’re like, I just
went through the most stressful, chaotic time of my life and I didn’t take any chips off the table. I watched my net
worth just go up and down for six months.
Speaker 1 – 23:58
So I would just advise, definitely think about that in advance and have something thought out and in place whether
you have an option to sell or you’re a year away and then outside of that. So another thing that was really important
is from an estate planning standpoint. So likely there could be anywhere from 10 to, could be more. But let’s say
you’re working 10 to 50 million in stock right now. The estate exemption is $15 million a person. So if you’re
married, $30 million, you’re likely going to be over that just given how much this company and stock has
appreciated. So a lot of estate planning vehicles that you could do. One strategy is freezing an asset. So what that
means is, okay, I have stock. Let’s say I have 5 million right now.
Speaker 1 – 24:52
Well, if I put that into a trust and I gift 5 million into a trust, I’ve used 5 of my $15 million credit. So I now have $10
million of credit left. But that 5 million that I put into the trust grows to 15 million. We froze the asset from an
estate standpoint at 5 million and now all of that 10 million of growth is also out of your estate, which avoids a
40% estate tax on a federal level. And so that is something to think about. You have to balance how much do I
need on my personal balance sheet to support my goals and my family?
Speaker 1 – 25:26
And then how much do we say is our home run money that we can say is for future legacy planning that we can
put into a trust for tax purposes, Asset protection purposes would be really important. And doing that earlier rather
than later is obviously way more advantageous because you can capture all that appreciation outside of your
estate. Another strategy would be a brat. So that’s a form of trust that you essentially take an asset you think is
going to appreciate, you attach an interest rate to it, say it’s 5%. If the asset goes up 15%, you capture the
difference of that 10% growth goes into a trust is out of your estate and then the remaining comes back into your
estate. If the asset doesn’t grow by 5%, there’s really no downside other than the setup cost of the graph.
Speaker 1 – 26:13
But that’s all then back still included in your estate. So that’s one strategy. If you have an asset like this that’s likely
to appreciate very fast and high is that’s a way to get some of it out of your state, but still have some flexibility with
it.
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Speaker 2 – 26:29
Yeah, that’s a good point, Jameson. I think it probably makes sense to bring this up too. You mentioned like gifting
into the trusts. One thing to keep in mind though is and I, I always hate to be the bearer of bad news on the set of
table, but it’s like, all right, if I give this open a stock into a trust and it’s worth 5 million bucks, what happens if it
goes to zero? Well, the downside of putting into the trust is if it goes to zero, you’ve used up your exemption of
million and now there’s way less than the trust. So that is something to keep in mind when you’re doing large gifts
into a trust. Be careful of what you’re putting in there and making sure it’s a sound decision.
Speaker 1 – 27:03
You could, you know, sell some cash out, put it invest it. If the company goes public, you definitely can hold a, it’s
easier to hold a publicly traded stock in a trust. So yeah, that is definitely a downside is you could put money in and
it goes down. But you know, there’s ways around it could be doesn’t have to stay in the stock post IPO would be a
little bit different. You can invest in a diversified account. So ways around that but definitely is one of the risks. And
then while that’s all going on just kind of order of operations on what else should I be saving in really would be you
know, Roth 401K. If you’re not doing that’s a good opportunity. We’re in like the lowest tax, not like we are in the
lowest tax environment ever.
Speaker 1 – 27:49
If you look at the history of tax rates. So anything that goes into a Roth you’re hedging that if taxes go up, it doesn’t
matter. Mega backdoor Roth you have this option. You contribute after tax contributions the 401. Convert it to
Roth. You can do a backdoor Roth IRA. Every person do $7,000. If you’re married, $14,000. A health savings
account is another 8,500 and some change that’s tax deductible grows tax free. And then outside of that it’s really
just taxable investment account. How much do you need to save in that? Which would be our lifestyle bucket.
That’s going to support whatever your go. And then one other thing to add too that’s important. Being at this
company, you move markets.
Speaker 1 – 28:35
The decisions that get made in that company dictate the general stock market and what happens with other
publicly traded companies based on partnership deals. How the AI impacts things. And so you have to be really
aware of we hit on a little bit is insider trading. The easiest workaround is if you are selling out and diversifying into
you know, diversified stock ETFs. If you disclose to the company that you do not have discretion of the account,
that your financial advisor has discretion of the account or maybe you’re using an SMA and a long short strategy.
You can be not on the hook for any insider trading because you’re not the one making the trading decisions. You’re
offloading that to a team to do it. So that just needs to be documented and disclosed. Same thing with the 10B5,
the 10B51 plans.
Speaker 1 – 29:29
With the 10B51 plans just needs it’s some documentation that needs done to to save. You know, you being ever
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accused of insider trading. So easy workaround, really easy to do. And then the other thing we can, we could build
the investment strategy you know around sector. So if you’re like well I’m really exposed to tech in AI right now with
my OpenAI stock. If we’re building a diversified portfolio in other publicly traded equities, we could exclude tech,
exclude large cap, you know, kind of balance out that concentration by investing in different sectors and asset
classes. What are common mistakes that we’ve seen.
Speaker 2 – 30:08
People make Yeah, I think the biggest, and we’ve kind of hit on a couple times, but you sell at the tender and you
don’t have a planning and you just let the cash sit there for eight months. It’s really important that you at least start
putting some of the money back to work for you. I wouldn’t drop it in all at once and it wouldn’t be prudent of me to
say to drop it in all at once, but putting some sort of strategy in place where it’s like on a weekly, monthly, quarterly
basis, I’m putting in another X amount of dollars into the market. So that would be one, making sure your money’s
actually working for you upon the sale. The second would be utilizing a charitable vehicle.
Speaker 2 – 30:43
So whether that’s a donor advised fund, a charitable trust, something with that though is you want to be sure that
you’re not just doing it for the tax deduction. Like you want to make sure you actually have a charitable inclination,
if you would. So that’s one, making sure you’re not just randomly giving to charity if that’s not a goal of yours.
Another would be like inflating your lifestyle. It’s probably really easy once you see $10 million hit your bank
account to be like I’m gonna go buy.
Speaker 1 – 31:14
This or even if it didn’t hit your bank account, just the stock price.
Speaker 2 – 31:17
Right. Like, right, I’m going to buy this BMW that I, I can probably afford. But it’s probably not the most prudent
decision. Other ones would be like being upfront with your spouse and your family. You probably want them to
know what’s going on. Probably wouldn’t hide it from your wife or your husband. Right. And lastly would just be
forgetting that concentration doesn’t really feel risky because you’ve made so much wealth in this. You probably
don’t see it as a risky asset, which it actually might be the riskiest asset you can own at this point now that you’ve
already built up that wealth.
Speaker 1 – 31:47
Yeah, yeah, I think those are all great points. And then definitely open conversation with spouse. If you’re not
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married, definitely consider prenuptial agreements. You don’t want to be in a position where divorce happens. You
have to give away a bunch of your hard earned assets that you’ve worked really hard to generate. And then I would
say to wrap up, when you’re choosing a financial advisor, whether you choose us or somebody else, we’re happy to
consult no cost basis and give you a second opinion or even first opinion without any cost to you and go through
our process. Also on our end we will, we charge an AUM fee. We will price though based on growth, so our fee tiers
down assets grow.
Speaker 1 – 32:37
But given that the upside of this type of stock will price the AUM fee based on where you will be, not where you’re
at today. So you’d get a pretty substantial discount. But when choosing a financial advisor, you’re kind of in a hard
position because the average age of a financial Advisor is like 60 years old right now. And so that person’s, I’m
making generalizations but probably pretty hard to relate to. You know, if you have someone that’s 60 and you’re in
your 30s or even 20s and you know you have, you’ve accumulated all this wealth quickly, like it’s pretty hard to work
with someone. Like there are definitely exceptions.
Speaker 1 – 33:17
And then a lot of like experienced financial advisors are at large companies and they’ve somewhat built a book of
business on their own, but they’ve never actually like gone through starting a business, running a business like
you’re experiencing it. One of the in OpenAI specifically, you’re in the mud of what’s going on in a startup. They’ve
never experienced that, so they’re not going to fully understand it. So really do your due diligence on who you’re
going to work with. But if you can find someone that’s close to you in age, has this experience, has kind of
understands what goes into a startup and building a company, the stresses, the struggles, the wins that you’re
dealing with, that’s I would say is the best scenario. It’s just given the age of financial advisors, that’s rather difficult
to find.
Speaker 1 – 34:14
So really do your due diligence, find someone you trust, they know what they’re doing, they’re not just going to try
to sell you a product and they’re really going to understand what your goals are and build out a planning. The other
conflict too would be if an advisor tells you, oh, just like sell everything, they might just want the assets to manage.
So you know, find someone that’s going to build the planning around what your goals are. And if your goals are,
hey, you only need to sell 20% of this to secure everything and I’m going to leave the other 80% in. Well, that might
not be in the financial advisor’s best interest because they want you to sell it all to bill it.
Speaker 1 – 34:45
But if you have someone that’s candid enough to be direct and tell you, hey, I think you should only sell 20%. That’s
in your best interest. That’s the type of relationship you want to.
Speaker 2 – 34:54
Yeah, Jameson, I think that was. That’s really good advice. You bring a good point. With the age, I think that we’re
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uniquely positioned here and you guys obviously don’t. You’re listening to this, you don’t have to meet with us, we’ll
give you a consult and stuff like that, but we’re like uniquely positioned from like an understanding and age
standpoint to really help guide this next tech influx of.
Speaker 1 – 35:15
And we work with. We have a lot of young people that have accumulated wealth fast, like your situation. We also
have people that are you 20 years from now that have been in part of these businesses or have started a business
and sold a business. So we have that perspective looking back on what’s life going to look like 20, 30 years from
now after this wealth and those conversations around estate planning, family governance, working with children,
all those things that are going to be on the table in the next couple decades that we’re equipped to advise on. So
as you navigate this chaotic, exciting, stressful time, make sure you have a sound financial planning. And if you
have any questions, feel free to reach out. We have a deep understanding of the situation and equity structure and
we’re happy to offer free consultations.