Choreo may win up to $5 billion of SpaceX IPO wealth by bulk sale but likely made a devil's bargain -- a low fee for a high-maintenance clientele, analyst says

Choreo pulled off a headline-grabbing coup by winning as much as $5 billion overnight from newly wealthy SpaceX employees, but the 50% price cut it used as a lure means a devil could be in the bargain, analysts say.

The $28-billion Chicago RIA won the unprecedented haul of 100-plus high-net-worth accounts by engaging in collective bargaining with at least 100 SpaceX employees. They will pay 50 basis points or about half the stubbornly resilient 100 basis-point fee RIAs generally command. See: Vanguard reassures RIAs (and others) that 'moonshot' SpaceX IPO is still grounded by process as four of its ETFs start soaking up shares as early as next week.

More may be coming. More than 4,400 current and former SpaceX employees became millionaires with the SpaceX IPO, according to news reports. 

The offer was opportunistic and based on unique circumstances, rather than as a concession, Choreo CEO Jason Van de Loo told CNBC, which broke news, June 9.

“This is a unique transformational event … We don’t see events like this often," he said.

Van de Loo got poached in 2025 from Edelman Financial Engines where he was head of wealth management. Edelman is an RIA with vast experience educating and advising corporate employees. See: Ric Edelman's RIA empire to merge with legacy The Mutual Fund Stores in $3-billion deal that takes Financial Engines private

Logic is powerful

Whether the deal is good or bad is unclear for the metamorphosis of Choreo or other RIAs that match the offer.

“It now exists as a proven model – and once a model works in wealth management, it tends to spread,” says Ed O'Gorman, CEO and managing partner of $1.4 billion of AUM River Wealth Advisors, an RIA in Camp Hill, Pa.

"Maybe not every IPO cohort will organize this way, but the logic is powerful. Employees talk to each other, compare fees, and realize they have bargaining leverage as a group, [and] if that works once, others will copy it. 

“The more concentrated and connected the employee base, the more likely this becomes a repeatable model,” he adds in an email.

Tough choices

In its first day of trading, SpaceX soared 30.7% to a high of $176.52, before closing at $160.95 – a 19.2% debut gain. Today (June 15), it closed at $192.50, up $31.55, or 19.60%. After hours it edged up another 3.26% to $198.90.

Some financial analysts say the stock is developing “meme-stock velocity," driven by intense retail hype, massive speculative valuation and Elon Musk's cult of personality.

With Anthropic's and OpenAI's IPOs on deck – the former filed its draft IPO paperwork, June 1 and the latter followed June 8 – RIAs are likely to face tough choices about offering wholesales rates to swarms of rich investors bearing unmanaged assets, analysts say.

Choreo expects to land between $1 billion and $5 billion and at least 100 new clients as part of its deal with SpaceX employees. The cut-price agreement also includes a means for more SpaceX employees to opt in, CNBC reported. 

The Choreo SEC ADV does not include a pricing table but says “the annual rate generally does not exceed 1.5% per annum … and we have an annual minimum fee of $8,000. ”

And, it's willing to bargain with groups: “Clients affiliated with certain organizations are subject to a reduced fee schedule and/or lower minimum fee amount,” the ADV adds.

The real challenge

"Prospecting among employees with employer stock and stock plans is not a novel concept," says O'Gorman.

"This has long been a practice for the firms managing stock plan, or taking companies public. What's new this time is that employees are organizing as a buying group, and that there are now large RIAs capable of serving these needs,” he says.

“In the past, these individuals would have been solicited and served by the firm doing the deal, [like] Goldman Sachs, Merrill Lynch, [or] JP Morgan … [but] the emergence of the independent RIA model has magnified fee transparency, [and] entrepreneurial RIAs act nimbly,” he explains.

Andrew Besheer, founder and principal of Bronxville, N.Y., consultancy Besheer & Associates adds that “collective bargaining is going to be a trend, at least near term."

Yet Choreo may find it has negotiated a devil's bargain, says Greg O'Gara, senior advisor at Datos Insights, in an email.

“Whether Choreo has made a devil's bargain depends on retention. The risk isn't the fee: it's the transition risk after lockup,” he explains.

"SpaceX's lockup structure is reported to be unusually complex … Assets won't flow in a clean wave, and once employees diversify out of concentrated SpaceX positions … the fee concession Choreo made to win the relationship becomes the ceiling rather than the floor. 

"If attrition is high after diversification, the economics will deteriorate, [but] if Choreo can retain and cross-sell, it was a smart land-and-expand play,” O'Gara says.

Headline grabber

Choreo is, however, probably not heralding a new era in which RIAs regularly beat the wirehouses to freshly minted IPO wealth, particularly as it only landed 2.5% of SpaceX's new millionaires, says Philip Waxelbaum, founder and principal of Masada Consulting, in an email.

"Don't write off Goldman, Merrill and JP Morgan in this bazaar. This kind of wealth creation and potential capture will bring the biggest, best and brightest to the war.

“Choreo has a nice little win but it’s only $1 billion-to-$5 billion. It's no more than an opening bid and a grabber headline. 

"Wall Street’s ‘A’ team will be very well prepared … [and] the big dogs are just warming up,” Waxelbaum says.

Goldman Sachs led the underwriting of the SpaceX IPO, in partnership with Morgan Stanley, Bank of America Securities, Citigroup, JP Morgan, and a mix of smaller shops, including Allen & Co., William Blair, and foreign banks, including Societe Generale, Santander, and Mizuho.

The size of the listing also gave SpaceX the heft to force the underwriting syndicate to take a much smaller “gross spread” of the IPO – 0.75% – when banks typically take a larger cut of between 1% and 3%.

Winning the cook 

Discount brokerages like Schwab and Fidelity, which provide Choreo with custody, are also stepping up their efforts to capture future IPO wealth by bundling financial advice, planning, stock-plan administration and even alternative investments into low cost package that will especially appeal to employees netting smaller sums in any post-IPO bonanza, according to O'Gara.

“Schwab and Fidelity both have the infrastructure to assemble something coherent around an event like this. The question is whether they can act nimbly,” he says.

Fidelity is the 401(k) recordkeeper for SpaceX employees and it has a budding wealth management business. Schwab is the primary registered investment advisor (RIA) custodian for Choreo.

The 400 or so SpaceX staff expected to net over $100 million would probably feel a deal with Schwab would be “slumming it,” but the others will have no such qualms, O'Gara continues.

"For someone who just cleared $100 million, Schwab's digital-first model would not match the moment, regardless of how good the underlying platform is … [But Schwab can win] the cook who just became a $2 million dollar winner, [if] not the engineer sitting on $50 million," O'Gara says.

“Schwab is way ahead of many competitors in this process," adds Waxelbaum, who cites Schwab's recent capture of Merrill Lynch breakaway, OpenArc, which built its practice on executive compensation, stock plans, and workplace savings expertise.

Schwab wants “to be in this business and will succeed though sheer force of will … [and] the newly minted millionaires are not likely to be snobs,” he says.

Fidelity already has a major share of the SpaceX pie. It administers the firms large 401(k) plan. 

Threat overstated

The idea that groups of investors will somehow undermine the standard RIA 1% fee is also overcooked, says O'Gara.

“There is genuine price compression happening here, but the comparison to standard 1% retail RIA pricing is misleading,” he explains. 

“Any firm managing $500 million-plus in a single relationship is typically already [charging] well below 1% … [so although] the compression is real relative to what an individual employee walking in off the street would pay; it is not, relative to what a sophisticated wealth management firm normally charges on institutional-scale mandates,” he concludes.

The simple fact is that pricing can get people in the door, but service is what keeps them in the room, adds Waxelbaum.

“The best kept secret in the business is that there is no 100 basis points pricing mandate,” he says.

“Price will matter, but it will not be rigid and whoever offers the most complete service platform between 25 basis points and 100 basis points will win.”

Just so, says Morningstar director of equity research Sean Dunlop, in an email.

“It's pretty standard to see declines – sometimes significant declines – in AUM fee rates for HNW and UHNW clients,” he explains.

“For context, Goldman Sachs' average client has $70 million in assets with the bank, and their average fee rate is close to 0.65%, the lowest among the public firms we cover, so I'd be inclined not to read too much into it,” he adds.

Yet even Goldman Sachs may be too small for the 46% of the wealth that the SpaceX IPO generates over time – namely Elon Musk's share. The founder and CEO has his own family office, Excession, run by Jared Birchall, a former Merrill Lynch stockbroker.

Servicing needs

With 40 offices and 200 advisors, the Parthenon Capital-backed* RIA has sufficient breadth to absorb a wave of new clients, most of whom are likely to prove tricky to get-up-to-speed, says O'Gorman.

“The real challenge isn’t asset management, it is advising these clients. The clients’ needs, financial literacy, liquidity constraints, and emotional readiness will vary dramatically. 

"The biggest risk for RIAs is promising bespoke service and then delivering assembly-line advice,” he explains.

“As for how many is too many, that depends on the firm’s staffing model. These new clients will have commonalities, but their service needs are going to vary widely. 

"For most firms, a sudden influx of dozens of highly complex households at once would be hard to absorb without service strain,” he adds. 

Anxiety of affluence

“This is the underreported story,” says O'Gara. 

"Wealth managers in the region describe considerable anxiety among [SpaceX] staff, given the sense that this may be their single opportunity to build generational wealth, and that anxiety is warranted, [For RIAs], the immediate challenge isn't AUM; it's behavioral complexity. 

"A cook or welder who just became a millionaire has no prior relationship with portfolio construction, tax planning, or concentrated stock risk. 

"Advisors will spend disproportionate time on financial education, psychological management around the lockup period, and persuading clients not to make impulsive decisions," he explains.

"The capacity question is real. Most wealth management practices are not built for simultaneous onboarding of dozens of clients with identical concentrated positions, staggered lockups, and emotional volatility. The average advisor manages 80-to-150 client relationships.

“Adding 20 to 30 first-generation millionaires at once – all with the same IPO-related questions and the same decision timeline – creates a service crunch that pricing alone doesn't resolve. Choreo's scale gives it more cushion … but this will test their onboarding infrastructure,” O'Gara cautions.

Sharing the spoils

Besheer says “these aren't your normal accounts … [which] is a real bandwidth limiter."

They will need “structures to avoid or defer tax liabilities that aren't plain vanilla, and will require more time and attention than maybe the average $1 million account might need. 

"So, except for the mega firms, it would be hard to take on more than say 10 per advisor, [because they] need all of those complex services at exactly the same time,” he explains.

The sheer success of the RIA model over the last two decades – around 19,000 RIAs now manage $10 trillion, according to Cerulli research – is another factor in the SpaceX collective bargaining deal, analysts say.

Decades ago, the wirehouses would likely also have captured most of the asset and client inflows created by the SpaceX IPO.

Now they must share the spoils with firms like Choreo, and Creative Planning, which has already landed “dozens” of SpaceX clients, CNBC reports.

Like Choreo, Creative Planning offers steep discounts to clients with more than $100 million in assets. The Kansas RIA charges centi-millionaires just a 0.25% fee based on AUM, according to its Form ADV.

Critical mass

Yet one swallow does not make a summer, says O'Gara. The forthcoming Anthropic IPO will serve as the litmus test for whether collective bargaining becomes a trend for giant listings.

Anthropic employees "are reportedly already in discussions with advisory firms about a similar collective arrangement. That suggests this is becoming an expected step in the pre-IPO playbook for large tech firms with broad equity participation and not a one-off," he explains.

“The enabling condition is equity reaching deep enough into the organization chart that a critical mass of employees can pool enough aggregate wealth to matter to a firm like Choreo or Creative Planning. 

"SpaceX had that. Anthropic likely does. Most companies don't,” O'Gara says.

Dunlop concurs.

“It's historically unprecedented to see an IPO at this scale, minting so many millionaires, [and] billionaires, in one fell swoop … In the case of SpaceX, [its share-ownership] reach is much deeper into the rank-and-file,” he says.

After Anthropic and OpenAI, “I suspect that we will not see anything like this for quite some time, if ever. For three likely $1 trillion-plus companies to float in the same year is genuinely absurd," he adds.

White whale

Choreo may move fast and break things but it's ‘justified’ considering the vast savings in acquisition costs – and the immediate leap in cash flow. The company will realize $5 million in revenues for each $1 billion of assets it brings under management.

Although the firm has to bear reduced fees, it has landed one of "the great white whales" in the industry, and the SpaceX group came onboard with little to no client acquisition costs, says Scott Smith, senior director of advice relationships at Cerulli Associates, in an email.

“Hunting for pre-IPO clients has been the white whale of Silicon Valley financial advisors for decades … [and] the scale of a common challenge justifies building an efficient repeatable process” for future IPOs, he explains.

“Normal client acquisition is [also] a major consumer of time, effort, and cash flow … [so] bringing on a group of this size with a common core planning challenge helps build scaled solutions that can be personalized to facts and circumstances when applied to individual clients.”

Dunlop adds that the Choreo deal "probably resets the bar for mega-IPO transactions, and … if you're onboarding tens of billions of UHNW client assets in one fell swoop, you'd be much more willing to give on price.

Other RIAs will work hard to catch up, adds O'Gorman.

“This will likely encourage more pre-IPO hunting in the RIA space,” he says. 

“Seeing one firm win a block of high-value clients before liquidity will incent others to want a seat at that table earlier in the cycle. The long-term implication is that some larger RIAs may begin focusing on prospecting among private-company employee bases.”

* SpaceX posted losses of $5 billion in 2025, and the S&P 500 index confirmed it would not fast track the company onto its benchmark, given its losses, and the fact that it has not listed at least 10% of its total shares for trading.

** Parthenon, which sold its stake in Allworth Financial in 2020, manages around $13.35 billion, including $4 billion of as yet uncommited funds. It also previously employed the same law firm, Elsberg, Baker and Maruri that represented SpaceX founder and CEO Elon Musk in his $44 billion dispute over the acquisition of X, né Twitter.