Wealth Managers Are Built for Employees, Not Founders

The advice that works for employees can destroy founder wealth

(TL;DR) Most wealth management advice is designed for employees, not entrepreneurs. After your exit, every advisor will tell you the same thing: diversify into index funds, max out retirement accounts, maybe hold some dividend stocks. That approach works if you're aiming for stability. It won't build legacy-level wealth. Founders who build generational wealth don't hand off control to wealth managers — they build systems that let them stay close to their capital while deploying it strategically.

Quick Answer: Why don't wealth managers work for founders?

What Wealth Managers Do	What Founders Need
Diversify into public markets	Control over value creation
Charge AUM fees (1-2% annually)	Tax-efficient structures
Recommend standardized products	Deal flow and direct ownership
Focus on market returns	Focus on after-tax compounding
Treat you as a client	Treat you as the allocator

The Advice Everyone Gives You

After my first significant business success, I encountered the same conventional wisdom everywhere: diversify into index funds, max out retirement accounts, maybe hire a financial advisor.

That advice wasn't built for founders.

It wasn't designed for someone who understands equity, control, and deal flow. It definitely wasn't designed for someone thinking about building lasting wealth systems.

The hard lessons I learned through both success and failure taught me that conventional advice creates conventional results.

Why Public Markets Turn Founders Into Spectators

You spent years fine-tuning your business — pricing, team, product, vision. Then you exit, and suddenly you're just another investor hoping the market behaves.

Public markets turn founders into spectators:

• You're stuck with standardized products
• Subject to algorithmic trading you can't influence
• Up against trillion-dollar institutions
• No say in timing, direction, or execution

What made you successful — control — is now completely out of your hands.

Read that again.

The same drive that built your company can destroy your family's future if applied incorrectly after an exit. Most founders don't realize they're making million-dollar decisions when they hand their capital to a wealth manager who treats them like every other client.

The Control Problem Most Founders Ignore

Wealth managers love to talk returns. But after-tax gains are the real scoreboard.

Here's what they don't tell you: investment management fees often become your single largest annual expense. Studies show that post-exit founders almost universally forget to include these fees when calculating their annual costs.

The math on AUM fees:

• $10M in assets at 1% AUM = $100K/year in fees
• Over 20 years at 7% growth, that's $1.5M+ in fees
• At 1.5% AUM, it's over $2.2M

That's before fund expenses, trading costs, and the tax inefficiency of constant rebalancing.

You didn't build a company to hand 1-2% of your wealth to someone every year for putting you in the same index funds you could buy yourself.

What The Ultra-Wealthy Actually Do

The ultra-wealthy understand something different. They treat public and private markets as tools — not destinations.

They might take a company public to unlock liquidity. But they don't let the story end there. They redirect capital into investments they can influence: ones that offer better tax advantages, more control, and disproportionate upside.

How post-liquidity founders deploy capital:

Phase 1: The First Year Stay liquid. Give yourself time to rethink your role — not as an operator, but as an allocator. This isn't downtime. It's prep with a purpose.

Phase 2: Diversification Building (Months 12-36) Begin positioning capital deliberately:

• 30% in public markets (for access)
• 40% in private credit and real estate (for stability)
• 30% in direct ownership or equity (for control and growth)

Phase 3: Wealth Optimization (Years 3+) This is where it gets interesting: trusts, tax layers, intergenerational planning. Sophistication isn't about complexity — it's about intention.

The Efficiency Paradox

Public markets are ruthlessly efficient — and that's the problem. The minute information hits, it's priced in. Edge disappears.

But private markets? They're built on inefficiency. That's where founders — with real operational perspective — have the advantage.

One founder I know sold his SaaS company for $9M. His original plan? Tech ETFs.

We proposed something different:

• $4M into a private credit fund (12% yield)
• $1.5M to acquire a local services business (3x EBITDA)
• $1M into pre-IPO companies via vetted founder networks

The result: stronger returns, cleaner tax positioning, and full control over how value was created.

Tax Architecture That Actually Works

With the right structure, private investments let you:

• Deploy capital through holdcos
• Use depreciation and business expenses to reduce taxable gains
• Time liquidity events on your schedule

Add in installment sales, like-kind exchanges, and trust alignment for generational transfer — now you're operating like a family office.

You don't need $50M to act like a family office. Today's tech stack makes serious strategy possible in the $3M–$10M range.

What Founders Should Do Instead

Stop thinking like a client. Start thinking like an allocator.

Build infrastructure first:

• A holding company
• Legal and tax baseline
• A few high-quality private investments

Grow into sophistication:

• Tiered advisors (not one firm that does everything)
• Tax-layered entities
• Systematic deal processes

Then optimize:

• Multigenerational planning
• Custom vehicles
• Your own edge-driven investment model

The Mindset Shift That Matters

Most investors chase returns. Founders can't afford to.

At the center of every serious family office is someone who isn't guessing. They're not picking stocks. They're not waiting for the market to behave. They're building a system. They're thinking across timelines. They're allocating capital the same way they used to allocate time — carefully, deliberately, with eyes open.

This is what separates a founder with capital from a founder with long-term leverage. One stays in motion. The other builds infrastructure.

Too many founders hand this over to a wealth manager and suddenly feel out of the loop. It's like letting someone else run your product roadmap — you might get lucky, but you're not really driving the strategy.

The answer isn't more products. It's more clarity.

The 60/40 Portfolio Isn't Built for Entrepreneurs

Let me be direct: the 60/40 portfolio isn't built for you.

You already understand what drives private returns. You've hired people. Missed payroll. Rebuilt systems. Sat across from vendors and negotiated line-item discounts. That experience is gold.

When you see a small business, you don't just ask "what's the EBITDA multiple?" You ask:

• Why hasn't this grown?
• What's broken in ops?
• Is this team any good?
• Can I fix this without stepping in full-time?

That's what makes you dangerous (in a good way). Most investors are spreadsheet-smart. You've got muscle memory.

How To Think Like A Capital Allocator

You don't need to become a professional investor to start thinking like one. What you do need is a personal framework — one that translates how you ran your business into how you now manage capital.

This isn't about beating the market. It's about staying in control of your strategy, your risk, and your outcomes.

Four mindset shifts that matter:

1. Capital is a Tool — Not a Trophy

Don't confuse net worth with financial intelligence. More zeros don't mean more control.

Ask: What does this money actually let me do? Buy time? Buy access? Buy strategy? Your capital should give you leverage and optionality — not pressure or paralysis.

2. Time Is Your Real Portfolio

Every decision you make has a timeline baked in. Good allocators stack those timelines:

• 0-2 years: Liquidity for deals and emergencies
• 2-5 years: Income-producing assets
• 5+ years: Growth-focused positions
• 20+ years: Estate strategy, long-term structures

You don't need to be perfect. But you do need to know what's happening — and why.

3. Returns Aren't Just Numbers

The best allocators aren't just chasing the highest IRR. They're measuring:

• Cash flow: Does this position fund something useful?
• Taxes: What do I actually keep?
• Control: Can I steer this or am I a passenger?
• Skill-building: Will this make me sharper?

A $2M position that kicks off income and gives you visibility might beat a $5M upside-only bet that's locked up for seven years.

4. Structure > Selection

What you own is less important than how you own it. A B-minus investment inside the right entity will outperform an A-plus one in the wrong structure — especially after taxes.

If you're serious about capital strategy, build your legal, tax, and entity infrastructure the same way you built your company's ops stack. Get it tight before you scale.

Key Takeaways

• Conventional wealth management advice is designed for employees, not entrepreneurs
• AUM fees of 1-2% cost founders $1.5M-$2.2M+ over 20 years before fund expenses
• Public markets turn founders into spectators — you lose the control that made you successful
• The ultra-wealthy use public markets for liquidity but deploy into private markets for control
• After-tax returns matter more than headline returns — structure determines what you keep
• You don't need $50M to think like a family office — you need a framework
• Build infrastructure first (holdco, legal, tax), then add sophistication over time
• The 60/40 portfolio isn't built for founders who understand operations and deal flow

Frequently Asked Questions

Why don't wealth managers work for founders? Wealth managers are designed for W-2 executives who need diversification and stability. Founders need control, tax efficiency, and the ability to deploy capital into opportunities where their operational expertise creates edge. Standardized products don't serve founders who think in systems.

How much do wealth management fees really cost? A 1% AUM fee on $10M costs $100K annually. Over 20 years with 7% growth, that's $1.5M+ in fees — before fund expenses, trading costs, and tax drag from constant rebalancing. At 1.5% AUM, the cost exceeds $2.2M.

Should founders avoid public markets entirely? No. Public markets provide liquidity, growth participation, and exit opportunities. The key is using them strategically — not as your entire allocation. Most sophisticated founders keep 20-40% in public markets while deploying the rest into private credit, real estate, and direct ownership.

What should founders do instead of hiring a traditional wealth manager? Build a Virtual Family Office structure using The VFO Value Stack™: legal infrastructure first, then financial oversight, then risk protection, then strategic deployment, then legacy planning. Use fractional experts instead of one firm that does everything.

When should founders start building wealth infrastructure? Before the liquidity event, not after. The best structures are established when you're still "just" a business owner. You don't figure out tax optimization after the IRS gets interested. You architect the system while you're still in control of timing.

What is The VFO Value Stack™? The VFO Value Stack™ is a five-level framework for building wealth infrastructure: Legal Infrastructure, Financial Oversight, Risk + Privacy Architecture, Opportunity Allocation, and Legacy & Governance. It provides the same systematic approach family offices use, accessible to founders with $3M-$50M in liquidity.

How do founders build deal flow without a wealth manager? Start with value — offer capital, strategy, and your operator lens. Choose a lane so people know what you're looking for. Build a filter for what you say no to. Systematize review on a fixed schedule. The best opportunities come through trust, not mass channels.

What's the difference between thinking like a client vs. an allocator? Clients hand over capital and hope for good results. Allocators build systems, set criteria, control timing, and stay close to their capital. Clients are passengers. Allocators are pilots.

Related Resources

Internal LegacyIQ Resources

The VFO Value Stack™: How Founders Think Like a Family Office — The five-level framework for building wealth infrastructure without the $50M minimum.

How Much Does a Family Office Actually Cost? — The real numbers behind traditional family offices and the accessible Virtual Family Office alternative.

Why Founders Should Build a Holding Company Before Exit — Level 1 of The VFO Value Stack™: Legal Infrastructure that saves $500K-$1M+ in taxes.

The Wire Hit. Now What? A Founder's First 90 Days After Exit — What to do (and not do) immediately after a liquidity event.

The Family Office Playbook — The complete guide to implementing The VFO Value Stack™ from foundation to legacy planning. Available on Amazon.

Go Deeper

The Family Office Playbook provides the complete guide to implementing The VFO Value Stack™ — from entity structure to legacy planning.

Get the Book →

About the Author

Bill Heneghan is the founder of LegacyIQ and author of The Family Office Playbook. He developed The VFO Value Stack™ framework to help founders with $1M–$15M in liquidity build generational wealth using family office strategies. His work focuses on making family office strategies accessible to founders without requiring traditional $50M minimums.