Technology entrepreneurs take a lot of risks in their businesses, but many of them invest very conservatively, say the leaders of a Silicon Valley wealth advisory firm that specializes in advising tech executives.
Paul Boyd and Brendan Connaughton have spent much of their financial careers focusing on the needs of people who take enormous risks in their business life. The firm they lead, San Francisco-based ClearPath Capital Partners, has become the wealth advisor to many high-net-worth tech executives in the region.
“To best serve clients in a particular niche, advisors must have a clear understanding of the type of investment management strategies that would best serve that group,” Boyd says. “Advisors should learn about the nuances of the niche and connect with the clients on their level. Let them know you understand their mentality and what’s unique about their particular focus.”
Boyd started ClearPath after working in Silicon Valley for several years because he says he wanted to serve clients he is familiar with. The tech booms and busts inherent in Silicon Valley means that entrepreneurs need to have an appetite for risk to be successful in business. To counter that, they tend to favor safety in their personal investments.
“Many of our clients offset their business life by investing like they are 70-year-olds,” says Connaughton. “But their level of questioning about money management is intense. They want to know how everything works before they make a decision. ”
As advisors, Boyd and Connaughton keep that in mind when working with tech executives. Once the clients are satisfied with the information, they make their own decisions about investing and managing their money, and they do not need handholding after the decisions are made, the pair says.
Boyd started ClearPath with himself and an office assistant in 1996, but that phase did not last long. ClearPath now has $170 million in assets and has a goal of $1 billion within the next five years. There are currently six advisors on board, and ClearPath is in the process of hiring four or five more.
Most of the 110 families the firm serves are high-net-worth clients in the Silicon Valley area. Boyd and Connaughton hope to expand to the other high-tech areas such as Seattle, Portland, Boston and New York City.
“There was a time in the late 1990s when the high-tech innovators thought their start-ups would never go down in value,” Boyd says. One client was making an enormous amount of money on paper and ClearPath advised him to do what he wanted and buy luxury items, like a yacht. They also showed him how to hedge some of his stock options.