News media outlets are full of news of how artists and businesspeople skyrocketed to the top to become wealthier than most people could ever imagine, and then came crashing down simply because they couldn’t hold on to their fortunes.
But the new generation of young millionaires and billionaires are making sure that they don’t repeat the mistakes their predecessors made.
Take for instance the case of Mike Zhang, who at the age of 14 and on a trip to China realized that Airsoft guns and gear were selling for a lesser price over there than they were in the U.S. After convincing his parents to import the products for him he started selling them online. The year was 2004.
In 2008 Zhang attended the University of California-Berkeley for a few months and, deciding it wasn’t for him, he dropped out to work full time on his business. By the time he sold the company to another entrepreneur it was already generating $20 million in annual revenue.
When news got around that he had some serious money in his pockets, his phone began to ring non-stop, and wealth managers from some of the biggest firms on Wall Street like Goldman Sachs, Merrill Lynch and Credit Suisse started to relentlessly pursue him. Some even sent him gifts in the hope that he would let them manage his investment.
Zhang instead turned to Andrew Palmer, managing director at Bel Air Investment Advisors. The two had met in 2011 and even though the young entrepreneur didn’t have money to invest, he took to Palmer’s interest in his company and heeded the sound advice the manager gave him. When the company sale went through, Palmer had become a “trusted advisor”.
“When I have a rainy day, I don’t want to talk to an opportunist,” Zhang said.
Palmer went on to help Zhang start a new company with a portion of his wealth. The remaining money was given to him to manage. He says that after Zhang many young clients started to approach him for investment. Their choice of investment is mostly in stocks, he added, but the clients also invest in hedge funds, master limited partnerships and real estate and bonds – a sign that they are smart enough to know to put their money in diverse portfolios.
They can’t be blamed for playing it safe; after all they have seen two crashes in their own lifetimes.