New AI millionaires want wealth advisers who can help give their money away

Unlike the traditional wealth-management client who is established in their career and may have built a business over decades, many of these new AI millionaires are in their 20s and 30s and have little time to contemplate how to manage fortunes that have effectively materialized overnight. But one thing they are clear about is the desire to be philanthropic, with some prospective clients aiming to give away 25% of their wealth or more, advisers say.

That means advisers must show they can help them structure their charitable giving, align their investments with their values and measure the impact of their money. Those that don’t lead with such capabilities can find their pitches fall flat.

“When you’re 30, unmarried and coming up against this wealth-creation event, the concept of parking money in a trust for a child you don’t have is a little bit hard to fathom,” said Akash Magoon, CEO of AI startup Adonis.

A prominent bank invited Magoon and other prospective clients to a New York Knicks game at Madison Square Garden when the NBA team was in the semifinals last spring. Magoon had fun but came away from a follow-up meeting feeling the advisers didn’t tailor the pitch to his circumstances, including his philanthropic goals.

The ability to advise on charitable giving “is front and center, and it is nonnegotiable,” said Julia Reed, national director of charitable consulting at DAFgiving360, formerly known as Schwab Charitable. “These wealth creators tend to be more focused on giving back to their communities and seeing the results of their philanthropy in their lifetime.”

For many of the AI industry’s overnight millionaires, there can also be financial benefits to giving. Advisers often suggest clients use donor-advised funds, or DAFs, because they allow the donor to get an immediate tax deduction and grant the money to charity at the time of their choosing. A common strategy is to fund them with shares of highly appreciated stock, allowing the donor to avoid capital-gains taxes that would result from selling the shares.

DAFgiving360 has seen unprecedented numbers of new DAFs being opened and funded this year. In the fiscal year ended June 30, it said it received more nontraded pre-IPO shares and private-business interests than in any previous year.

A flood of donations isn’t necessarily imminent. Only a handful of major philanthropic gifts have come from AI founders so far, charitable consultants say, let alone from midlevel software engineers.

Still, advisers say philanthropy is a common aspiration among this new wave of clients. Fueling the charitable urge, particularly at companies like Anthropic, is a mission-driven corporate culture that combines effective altruism—the idea that people should use evidence to determine how to do the most good with their time and money—and the guilt from AI doomerism—the fear that AI could wipe out or dramatically harm humanity.

The seven co-founders of Anthropic have pledged to donate 80% of their equity to charity, and the company’s IPO prospectus outlines a donation-matching program that allows employees to donate equity awards to charity. OpenAI offers to match employee contributions to DAFs as part of a partnership with DAF provider Daffy.

“They’re buying into the notion that AI is powerful and can do a lot of good but can also eliminate jobs,” said Shirl Penney, CEO of Dynasty Financial Partners. “They feel they have the obligation to give back.”

Dynasty is on an internal list of wealth-management firms provided to Anthropic employees, according to people familiar with the matter.

Philanthropy was a priority for Magoon after he sold his interest in Nayya, an AI-enabled tool to help individuals select insurance benefits, to one of its biggest investors and customers in 2022. Raised in Baltimore by Indian immigrants, he aims to give away at least 10% of his wealth in accordance with the Sikh religion.

Magoon, who lives in New York, started working with advisers at Merrill Lynch who helped him set up a DAF. He contributed nearly $200,000 to the fund and used it to pay for a scholarship for five students a year to attend his alma mater, the University of Maryland, and study computer science or economics. The students must be born and raised in Baltimore.

Magoon went on to co-found Adonis, which uses AI to help hospitals submit claims and fight insurance-company denials. He could be in a position to take the company public or sell it in the next 18 to 24 months and is contemplating starting a foundation.

“Giving back to the communities that have helped me is really important,” said Magoon, who recently reupped the scholarship for another five years and continues to work with the same group at Merrill. “What I want my adviser to do is to educate me on the different mechanisms for being charitable.”

The focus on charitable giving has favored a crop of wealth-management firms that have built their brands on having a values orientation. Advisers at OneWell, which says it serves “values-driven” clients, helped three of them pool tens of millions of dollars to create a joint foundation earlier this year, according to managing partner Amir Memon.

Combining their resources will let them write bigger checks and gives them a budget to hire staff. Memon has helped bring in outside consultants who are subject-matter experts in areas such as education to help the clients clarify their philanthropic priorities.

“My role, personally, has been a lot more about introducing, facilitating, convening and giving them comfort that they are making good financial decisions,” he said.

Haley Schaffer has had success attracting young millionaires at San Francisco-based Waypoint West. She founded the firm, which touts a focus on philanthropy and purpose-driven investing, about a year ago because she felt there was a gap in the marketplace.

“You have these old-school private banks going after these newly wealthy young clients,” Schaffer said. ”We just kept hearing from our peers that there’s such a disconnect.”