A cohort of approximately 100 current and former employees of SpaceX has engaged Chicago-based registered investment advisor Choreo to oversee their wealth in anticipation of the rocket company's initial public offering, scheduled for Friday. The group, which collectively holds an estimated $1 billion to $5 billion in potential assets, negotiated an annual management fee below 0.5%, undercutting the industry standard of roughly 1% of assets under management, according to a report by CNBC on Tuesday.
Choreo, which manages and advises on more than $28 billion in assets, operates over 40 offices and employs roughly 200 wealth management professionals. A spokesperson for the firm emphasized that its advisors specialize in the intersection of tax and wealth planning, a skill set particularly relevant for clients facing complex transactions tied to significant wealth creation. The firm's scale and infrastructure, the spokesperson added, enable it to support sophisticated investor groups navigating the nuances of pre-IPO liquidity events.
The selection of Choreo comes amid intense competition among mega-RIAs and Wall Street banks to capture the wealth generated by SpaceX's highly anticipated listing. Earlier reports from Bloomberg indicated that more than 1,000 current and former SpaceX employees, with a combined net worth of approximately $20 billion, had formed a collective to negotiate favorable advisory terms. Morgan Stanley, as well as large RIAs such as Creative Planning and Corient, were also reportedly in the running to manage portions of the group's assets.
The fee structure negotiated by the SpaceX employees reflects a broader trend among ultra-high-net-worth clients to demand lower costs and specialized services. Traditional advisory fees of 1% have come under pressure as investors increasingly seek value and transparency. Choreo's sub-0.5% fee, while competitive, is not unprecedented for large, concentrated asset pools, but it underscores the pricing power that wealthy cohorts can wield in the current market environment.
SpaceX's IPO is expected to be one of the largest in history, with valuations potentially exceeding $1.75 trillion, according to recent reports. The event has spurred a flurry of activity among financial advisors and ETF issuers. For instance, ERShares CEO Rejects $400M in Inflows to Shield XOVR Investors Ahead of SpaceX IPO, highlighting the lengths some firms are going to manage exposure. Meanwhile, ETF Issuers Rush to Launch Leveraged Funds Tied to SpaceX's $1.75 Trillion IPO, indicating strong market demand for speculative vehicles linked to the listing.
The Choreo engagement also illustrates the growing importance of affinity groups in the RIA space. By banding together, the SpaceX employees were able to negotiate favorable terms and access specialized tax and wealth planning expertise. This model is increasingly common among employees of high-growth companies, who often face complex decisions around stock options, concentrated positions, and tax optimization. Affinity Groups Drive Retention, Revenue at RIAs: Three Case Studies provides further insight into how such collectives benefit both clients and advisory firms.
For advisors, the SpaceX IPO represents a significant opportunity to attract new assets, but also a challenge to deliver value in a competitive fee environment. The ability to provide sophisticated tax strategies and personalized planning will be key differentiators. As the IPO date approaches, the race to capture the wealth of SpaceX employees is likely to intensify, with Choreo's early win setting a benchmark for fee and service expectations.
