AI Billionaires: Record Pace of Wealth Creation
The AI Boom is Creating a New Generation of millionaires – and Wealth Managers are Racing to Catch up
San francisco is experiencing a wealth surge unlike any other, fueled by the explosive growth of artificial intelligence. The Bay Area added 66 new millionaires in the past year, according to New World Wealth and Henley & Partners, doubling its millionaire population over the last decade – a rate far exceeding the 45% growth seen in New York.
This influx of wealth is dramatically reshaping the city’s economic landscape. last year saw a record number of homes sold for over $20 million in San francisco, according to Sotheby’s International Realty. Rising rents, home prices, and overall demand, largely driven by AI, represent a stunning reversal for a city that was recently grappling with predictions of decline.
“It’s amazing how geographically concentrated this AI wave is,” says erik Brynjolfsson, director of the Stanford Digital Economy Lab and author of The Second Machine Age. “The people who know how to found and fund and grow tech companies are there. I’ve heard people say for 25 years ‘this is the end of the Silicon Valley‘ or some other place is ‘the new Silicon Valley.’ But Silicon Valley is still Silicon Valley.”
The creation of these new fortunes presents a meaningful opportunity for wealth management firms. As AI companies mature and perhaps pursue initial public offerings, a wave of previously illiquid wealth will become accessible, creating a historic moment for the industry. Major private banks, wirehouses, independant advisors, and boutique firms are all actively courting the AI elite, hoping to secure their business.
However, attracting and managing this wealth won’t be straightforward. A considerable portion of AI fortunes remains tied up in private companies, making it difficult to promptly translate into traditional wealth management accounts.
“I would say a much higher percentage of the ultimate wealth being created is illiquid,” explains Simon Krinsky, executive managing director at Pathstone and former managing director at Hall Capital Partners in San Francisco. “There are ways of getting liquidity, but it’s tiny compared to being employed at Meta or Google.”
History offers a compelling parallel: the dot-com boom of the 1990s. Newly minted dot-com millionaires initially invested heavily in companies within their existing networks – friends,colleagues,and shared investors. The AI wealthy are likely to follow a similar pattern.
“Everybody turned around and invested with their friends in the same kind of companies that created their own wealth,” Krinsky says.
But the dot-com era also taught valuable lessons.After experiencing the volatility of concentrated investments in a single, speculative industry, many dot-com millionaires sought the diversification and professional management offered by wealth management firms. Some even disrupted the industry itself, driven by dissatisfaction with traditional banking practices. Netscape founder Jim Clark, for example, launched MyCFO in response to his frustrations with the existing wealth management landscape.
Krinsky anticipates a similar evolution among today’s AI entrepreneurs. He believes AI itself has the potential to disrupt – and even replace – many traditional wealth management functions.
Ultimately, however, the ultra-wealthy AI founders will likely recognize the value of personalized service in areas like tax planning, estate planning, inheritance, and philanthropic advising.
“After people were beaten up or bruised up in the early 2000s, they came around to appreciating some degree of diversification and maybe hiring a professional manager to protect them from themselves,” krinsky concludes. “I anticipate a similar trend with the AI group.”