Remember those geeks in high school with glasses and pocket protectors? They could be your next client. By this year, rank-and-file tech employees are expected to generate $100 billion of new wealth, according to Andy Rachleff, CEO of Wealthfront.
Last week, Bloomberg BusinessWeek wrote an interesting profile of Rachleff’s online financial advisory firm, Wealthfront, mentioning other online advice firms like Betterment and Personal Capital, which was one of our Ten to Watch for 2013. WealthManagement.com has also written about the online advice revolution.
But for advisors, the more compelling aspect of the story was Rachleff’s predictions. Tech IPOs are estimated to create $500 billion in total new wealth by 2016, he told Bloomberg BusinessWeek. That’s a huge client base that generally flies under the radar. OK, Bill Gates, sure, but nobody ever thinks about the profitability of rank-and-file techies. Every year, they’re moving up the food chain.
The question is, how do advisors tap this new wealth? Techies have different needs, and of course, use different media to communicate. Here’s how the article describes it:
Financial advice is a tricky sell in the Valley. The place is full of Ph.D.s with problem-solving skills, an unusually strong aversion to fees, and no clue what to do with their money. “The common refrain we get from people at companies that are going public is, ‘How do we get those suits out of our lobby.’”
Where do you look? They’re not just in Silicon Valley. The Big Apple—New York—has its fair share of techies. According to a report by residential development consultant Nancy Packes, technology workers have grown their presence from 7 percent of the city's renters in 2005 to nearly 12 percent in 2011.