- One of the tricks is to be thinking well in advance of an IPO. Who are the people that I already serve? Who are the people in my network that work for these kinds of places? And just starting to talk to them earlier, whether there's an IPO or not. Welcome to Inside the Advisor Practice, a BlackRock podcast for US financial advisors. I'm Cullen Roberts, Head of Ultra High Net Worth Consulting at BlackRock. And today I'm sitting down with Dave Donnelly, Managing Director at SpiderRock Advisors, to discuss the evolving IPO landscape and how advisors can help clients navigate the risks and decisions that come along when significant wealth is concentrated in a single stock. So Dave, IPOs, one of the huge stories of 2026. Seems like there's more coming. Can you just give everybody a sense of the scale of the IPO market and how big we think this next wave might be?
- For sure.This year's already been incredible. If you look at IPO valuations this year, just year over year, we're at 3X the size. And if you go back to 22, this year's IPOs are at 10X. So the amount of public capital coming to market for advisors to work with is dwarfing anything we've ever seen in the past.
- I mean, it's huge, but what makes this moment different for advisors and people serving executives and founders and these folks associated with these big IPOs?
- So what's different in today's IPO landscape versus periods in the past is that because these companies have been private for so much longer and the values are so much higher when they're going public, the real excitement is around the IPO. Advisors are now helping clients with trillions of dollars of these stocks and in cycles past, the real story was, can I get my hands on some IPO shares for my best clients? That was a different conversation than it is today, which is the wealth has already been made, now we need to go manage it.
- Well, the other thing that we hear from advisors, because we both talk to them all day long, is that the IPO market dried up for a little bit. And so that skillset wasn't an everyday skillset that they were using and they're having to relearn NSOs and ISOs and all the nichey subject matter expertise that comes along with helping a client through these situations.
- That's right. And these tech companies have great programs for employees. There have been a multitude of ways for wealthy individuals to access private shares. Think about like daisy chains of SPVs and folks getting pre - IPO. So the number of ways that advisors are facing off with private shares coming public are more than I've ever seen, making the opportunity huge, but also making the amount of information they need to be facile with larger than it's ever been. So I'm working with advisors all the time once they have these shares and they're interested in the different angles they can take to help clients manage risk. I think one of the biggest things everybody's interested in where you spend your time is how are advisors actually getting in front of these huge opportunities?
- So much of this is about being early. What happens is anytime a major company announces an IPO, now everybody rushes to LinkedIn. One of the tricks is to be thinking well in advance of an IPO. Who are the people that I already serve? Who are the people in my network that work for these kinds of places? And just starting to talk to them earlier, whether there's an IPO or not. And there's a little bit of a loss leader in there because you're going to meet some people who you invest some time in that may or may not actually be a part of an IPO. But I promise you, if you wait too long and you're one of the 500 financial advisors who contacts them, you're not going to get through to those people to actually help them in these situations. The other thing that I would say is the advisors who are doing really well in this space tend to find a company or two companies and learn everything about these documents and the rules of what it means to be an executive at these companies. Because if you try to learn that for 15, 20, 25 different startup tech companies, it's just too much. But what you find is we find niches where a couple weeks ago I was with an advisor and their whole niche was a rocket company, not the big one that everybody talks about. And they had learned absolutely everything about the restricted stock plan and the options that those kinds of people get, which just inherently makes it easier for the people that work there to say, You got to meet Dave. Dave knows everything. You don't need to talk to anybody else. And so that word of mouth of being a subject matter expert on the nuances of a particular company's setup is invaluable in these situations.
- That's interesting. So each new IPO is its own realm of expertise that some advisors can go after and really strive.
- Yeah, because the rules are different for all of them. The holding periods are different, the restrictions are different. The types of options that these people get are different. And so you can't just blanketly understand it. You really have to get in the weeds and understand the rules surrounding each specific company and how they're going to come to market.
- That makes sense. And that tracks with our experience for the cases we've worked on this year. Some of the biggest cases we've worked on, I'm always curious asking the advisor how they got this situation in front of them. I've been working on this client for years. We've known this was an eventual outcome. And so accounts were set up and ready to go so that once the shares did go public, they were able to ACAT them in and get to work on them.
- So for advisors who aren't as familiar with options-based strategies, can you give people a sense of SpiderRock and the different ways that you all can help people?
- Certainly. So SpiderRock Advisors is focused on risk management. We spend a lot of time working with folks who own more risk in a single name than they otherwise would, but a lot of times taxes is what's holding them back from getting their portfolio the way they'd like it to look. The IPO landscape has generated an immense amount of opportunity. We've seen cases at the most extreme folks, 90, 95% of their liquid net worth is now in this newly public stock and it just is an entire change to their lifestyle. So the questions we get asked regularly are unsurprisingly about risk management. Some people are looking to generate cash flow, covered call writing programs are a way to engineer some cash out of newly minted public stock. A lot of people are looking for a heavier level of risk reduction, not to say that they're no longer bullish on the name, but if you've already won the game and invested $100,000 and now you've got $12 million in the stock, which we've seen all the time, a strategy like an option collar can help where you buy put protection so that even if the stock were to have a big drawdown, you're protected, you pay for that downside protection by capping your upside. That's really common in especially the high flying IPO space. Some folks are looking for financing. They don't want to sell their stock and pay tax, but they'd sure like to get some cash out of this thing. It's great to be wealthy on paper. It's even nicer to have the vacation home. And so we're doing a lot of hedging and then helping clients borrow against their position with something we call capital efficient borrowing. And then the last one that we see and address all the time is just helping them diversify. Every advisor will tell you 90% of your liquid net worth in one stock's probably not the best idea, but you can't really sell and permanently impair your capital with that tax bill. So can we just swap the exposure? Can I change my newly IPO'd stock into something more diversified? And using options, you can do that without having to sell a share. So those are the main use cases that our team is facing off with every day.
- Yeah, it's really interesting because that's true and also so much of this is a storytelling exercise. And so I've heard advisors with you talk through what are your choices here? And people do really well with multiple choice questions. You can say things like, Listen, in situations like this, sometimes people want to bring their risk down because they have too much of it. Sometimes people want to generate income off of it. Sometimes people want to slowly get out of these positions in a way that doesn't kill them from a tax standpoint. Sometimes people want to borrow against it for that house. How do you feel about those things? And then you guys can help them actually figure out how to do those things once they have that question answered.
- 100%. Those prompts and helping a client understand what's even possible. I mean, a lot of times these folks are really smart engineers, but of course they're not exposed to what the option market can do or capital markets in general, which is why the value of advice generally in these scenarios is higher than most.
- Yeah. And it's also in my team, ultra high worth consulting, we get brought into a lot of these, what I call wild and wonderful, very large situations. And the investments are a piece of the conversation for sure, but there's also all of these other advanced planning techniques that advisors and their CPAs and their estate attorneys will bring in. There's different trust structures and there's charitable giving options to come out of these. Sometimes these people will donate the shares to charities that they care about once they're liquid and into the market. So what we're really seeing from advisors is certainly they're taking advantage of the vehicles that we bring to them, but that's just a part of a much larger strategy involving advanced planning and gifting and the investment options that they have in those spaces. So Dave, the other thing I want to talk to you about is, I know you love SpiderRock, but it's not the only vehicle in the space. And we also, through Aperio, offer direct indexing, there's exchange funds in the industry. Can you just pick a case and give us a sense of how multiple of these vehicles, because they're generally not one size fits all, so how multiple vehicles come together to help these families?
- That's right. I think any one of these can be helpful, but it's rare that a client's goal is entirely just diversify me right now into the S&P, right? Their goals are built around their lifestyle. They want some cash flow, they want some protection so they can sleep at night, they want some diversification. And so the best approaches I see where we get to the best outcomes are usually a mix and match approach to all of the things out there on the playing field. In addition to the option-based solutions I've described, pairing those a lot of times with long only or even long short direct indexing strategies make for one plus one equals three. So imagine we get some risk off the table with an option strategy. Well, now we've freed up some risk and some capital to go fund something that is beta oriented, tracks a benchmark, and can throw off capital losses out of the initial allocation. We have a huge problem, which is embedded capital gain in that IPO stock. The clients who have benefited from all of these gains have as bad of a tax problem as anybody in the industry. And so finding ways to cash fund beta exposure that can hand back capital losses to help get that portfolio allocation right, we see as a tremendous value. And again, pairing with things like Aperio or other products in the industry gives you that one plus one equals three.
- Yeah. The other end of that spectrum are these people who want to ride their stock. They're a believer in the company that they're a part of and they think it's just going to keep going up and up and up. And one of the things I've heard advisors say to these kinds of people is you don't have to hedge or unwind all of this because a lot of times these families think either in or I'm out. The reality is for so often in these cases, it's they want to hedge a portion of it. They're going to let it ride with a lot of it, but they want at least a portion of it that they've protected at some level or is generating income off at some level or doing one of the other things that we talked about a few minutes ago.
- Definitively. Partial allocations I think are the starting place. One size fits all doesn't make sense. And again, it's just extremely unlikely that a client's entire goal is just a call writing program for the whole position. So what we work a lot with advisors on is trying to get the answer out of the client of what risk actually feels right, what cash flows feel right, what kind of tax budget feels right, and from there, work on sizing all of the different pieces for a really custom program client by client. So a lot of what I just talked about is strategies you can use today to address risk and cash flows. But what we're seeing from the IPO environment today is in many cases generational wealth, eight and nine figure positions for newly minted ultra, ultra high net worth folks. I know your group is focused on that segment of the market and working with advisors who operate there. I'd be curious to hear the types of cases you guys are seeing and what the high-end advisor is working on to help clients over a multi-generational period.
- It's fascinating, honestly. The amount of money being created that we see every day, and it's not just IPOs, it's also business sales and it's land sales to data centers and crypto millionaires. I mean, it really is fascinating when you stop and think about all that. But what I think is most important for advisors to be thinking about is that most commonly, this is new money for these people. Certainly there is generational wealth that also gets involved in things like IPOs if they're an early investor in one of these companies, that's a thing. But commonly, this is a first generation person who works at the right company at the right moment and goes from being pretty well compensated to pretty rich in a short amount of time. And so the role of the advisor really becomes behavioral. It becomes helping them think about what do you want this money to do? And there's some really important but really basic questions that we hear get asked all the time, things like, do you want to give some of this away? And that sounds good, but commonly not everybody does. Not everybody has a charity or a college in mind that they want to give a portion of this money to, or they're just not charitable yet. And then the flip side of that is commonly these are times when foundations get started because the benefit of donating to a donor advised fund or starting a foundation in the year of the sale of those purchases is maybe potentially going to help them from a tax standpoint. Are you charitable? Do you want to leave any of this to your kids? Those are really hard questions. One of the biggest things we hear from newly ultra high net worth families is how do I avoid creating trust fund babies? And if they do want to protect the kids, now you're talking about a whole different class of estate structures. There's life insurance structures that are out there. And so that's, I think, one of the areas that I would push advisors on is if you want to play in this space, you've really got to get close with estate attorneys and CPAs because we're not going to tell people what to do in my team. We're there to help them think around these problems and get their mind in the right areas, but they're still going to need local professionals to help them write these documents and they're still going to have to practice the types of questions they're going to ask these families. And again, to my previous point, multiple choice is just so much more powerful than open-ended questions because when you ask people questions they don't know the answer to, they don't like to answer those questions. So giving people different things to choose from as you start to have these incredibly challenging conversations tends to work out better for advisors.
- That's great. So I know for our team, when advisors are looking to engage on hedging and monetization of these positions, they reach out, they call our team, and we go deep in the weeds on case studies. But for this kind of work and the real focus on the ultra high net worth playbook, how can folks engage? What kind of resources are there for them?
- So the very simplest way to have us help you is to just go to your local market leader at BlackRock and bring a case. I have a situation, it looks like this, and it's their job to find the right people internally to help solve whatever challenges, whether it's the creation of a foundation or whether it's a single stock challenge or whether it's how do we do any of the things that you just described because you have all these amazing teams. You have your team, you have the Aperio team, you have my ultra high net worth consulting team. We've got an endowments and foundations team. We've got all these people, but it's our job to hear you and what you're working with and then find the right people. So we just encourage people to connect with their local BlackRock market team and then we can go from there.
- I love that. We love the cases that come in and there's a lot of complexity to them. We can add the most value. So for your group, when an advisor does have one of these really interesting IPO cases on the line, they're going to give you a call and see what to go to work with. What are the top three questions that advisors can ask that prospect to help move the process along?
- Well, the first thing I would say before we even get to the questions is I would say that the way we speak to these families is so critically important, right? They want to see you demonstrate that you've seen their movie before, right? So to say, Listen, we've helped families like you through situations like this in the past, is what a family wants to hear from any advisor that they're going to hire to help them through one of these IPO situations. But it's so important. If we're going to be helpful, we have to know timeframes around when, because they're not all going to be massive media moving headlines. Some of these IPOs are going to be much smaller and much less well-known. So what are the timeframes? You need to figure out what are the rules that these families are dealing with? How long do they have to hold it? What type of option is it? And we have materials that can help people think through the different types of options. And then we can talk about what you talked about, which is what do you want it to do? Do you want to ride it? Do you want to hedge a portion of it? Do you want to take income off of it? Do you want to borrow from it potentially? Do you want out? Some people, and you're never going to know what their answer is going to be. Everybody has a different perspective on what they want this new asset to do. And so having a sense of what the client wants to accomplish allows us to then go, okay, here are the types of solutions, whether they be advanced planning and/or investment solutions that families like this tend to think about, and then we can start modeling things for those families. So Dave, episode number one, Inside the Advisor Practice in the books. We appreciate you being guest number one.
- Appreciate you having me. Cheers. Great to see you.
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- 1. SEC, IPOs: Number and Proceeds(average IPO proceeds by calendar year, 2015–2025); Bloomberg, 2026 year-to-date IPO proceeds data, including SpaceX. Average proceeds calculated as total IPO proceeds divided by number of IPOs. Data as of June 9, 2026.
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