Financial planners who serve newly liquid tech employees describe a predictable sequence of freeze, tax shock, real estate temptation, and slow diversification
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The first thing a newly minted millionaire should do with a windfall is nothing. That's the near-universal advice from financial planners, wealth managers, and tax advisors who serve tech employees after IPOs. The challenge is getting clients to listen.
With SpaceX already public and OpenAI and Anthropic expected to follow, about 12,000 people stand to become multimillionaires, about 800 of whom will hold more than $100 million, according to an analysis from Hill.com. One Anthropic employee, after just three years at the company, has accrued $40 million in vested equity with another $30 million pending, wealth advisor Mark Cecchini told Business Insider. An OpenAI employee is already considering a $6 million home.
Most of that wealth will be locked up for months after the IPOs close. Employees will owe income tax on their vested equity the moment it vests, whether or not they can sell a single share. For many, the tax bill will be the first thing that arrives and the cash to pay it the last.
Every advisor interviewed or cited across wealth-planning literature starts with the same move: park the money in Treasury bills, high-yield savings accounts, or money market funds and make no irreversible decisions. Darrow Wealth Management recommends waiting at least several months, perhaps a year, before making large purchases, gifts, or charitable commitments. The firm puts it bluntly: "You can only spend a dollar once."
The reasoning is psychological as much as financial. A guide published by the Financial Vulnerability Taskforce describes "Sudden Wealth Syndrome," a concept introduced by psychologist Dr. Stephen Goldbart, as a legitimate behavioral response that can impair financial judgment during the critical early period of wealth transition. Clients experience heightened stress, identity disruption, and what the guide calls "financial imposter syndrome," where recipients feel undeserving of their wealth and avoid decisions out of fear.
The freeze is also structural. Lockup periods of 90 to 180 days are standard after an IPO, meaning employees will spend the first months of millionaire status watching a fortune they can't touch. Financial advisor Bryan Hasling told Business Insider that if Anthropic goes public in October, employees might not be able to sell shares until the following spring.
Before employees spend a dollar, many discover they owe far more in taxes than they expected. At many startups, employees earn stock over time but can't sell it until the company goes public. When the IPO happens, the IRS treats the entire accumulated value as income in a single year, even if the employee hasn't sold a share. Three years of stock can become one year's tax bill overnight.
Non-qualified stock options generate ordinary income at exercise, measured by the difference between fair market value and the strike price, as enterprise software platform Carta explains. Employees with incentive stock options face a separate problem. When they buy their shares at the discounted price the company offered, the IRS counts the difference between that price and the current value as a kind of phantom income under a parallel tax system. The bill arrives even if the employee never sells.
Hasling told Business Insider that people make two common mistakes during and after IPOs: they treat their share value as liquid cash, ignoring the future tax hit, and go in without an established goal for their net worth. "Just know your number," he said.
Employers typically withhold RSU income at the 22% flat supplemental rate, even when the employee's actual marginal rate is 37%, leaving employees with a surprise bill for the difference at tax time.
Real estate is almost always the first thing the newly rich splurge on. The instinct to buy a home is overwhelming, especially in San Francisco, where median prices have climbed 14.4% in a year and homes sell in two weeks. But advisors push back hard. "I've seen clients purchase large homes in faraway locations that they ultimately realize they will not use frequently and end up being a major ongoing financial burden that took several years to sell," Robert Karger, who advises centimillionaires and billionaires, told Fortune. Karger's advice is to wait six months to a year.
Selling concentrated stock comes next, and it takes longer than most employees expect. Fidelity outlines the standard toolkit — phased sales, exchange funds, options hedges, and tax-loss harvesting — but the common thread is that diversification is a multiyear process. Employees who hold most of their wealth in a single company's stock face the same risk that made them rich, and unwinding it without triggering massive tax bills requires the same patience the first 90 days were supposed to build. A recent change to federal tax law offers some relief. Employees who hold stock in qualifying startups for at least five years can now shield up to $15 million in profits from capital gains tax, up from $10 million for stock issued before July 2025.
A smaller but meaningful share of newly liquid capital flows back into the startup ecosystem. Carta's Q3 2021 Liquidity Report documented a surge in secondary transactions as newly liquid engineers and operators became angel investors and limited partners, typically within 12 to 36 months. Philanthropy follows a similar timeline. Advisor Jamie Hargreaves told Business Insider that more everyday employees are putting stock into donor-advised funds, which eliminate capital gains tax on appreciated shares while generating a deduction.
Research on windfall recipients suggests the planning only goes so far. A study by Cory Thompson and Russell N. James III using Health and Retirement Study data found that each inherited dollar increased next-wave net worth by only $0.61, measured about one year later. About 42% of inheritors had spent their entire windfall by the next survey wave.
Tech employees tend to be younger, higher-earning, and more financially literate than the average inheritor. But the behavioral impulses are the same. The rush to buy a home, the overconfidence that follows business success, the concentration in familiar asset types — advisors see the same patterns across every type of windfall. The difference is that tech employees have more zeroes on the check and more complex tax obligations wrapped around it.
The advisors who work this territory describe their role in blunt terms. They try to slow the client down, fix the tax-sensitive decisions first, and treat the client as vulnerable until proven otherwise.
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