Post-Twitter IPO: "Suddenly everyone thinks you’re Santa Claus"
Post-Twitter IPO: "Suddenly everyone thinks you’re Santa Claus"
Twitter may be the most famous company to go public this year, but 2013 was a monster year for IPOs in general.
And initial public offerings can bring big money to employees, on paper at least. Things can get a little awkward this time of year for the newly-rich, as certain friends and family members raise their holiday gift expectations. Strike it rich with an IPO, and suddenly everyone thinks you’re Santa Claus.
“You find you have relatives and friends you never knew you had,” says Doug Wolford, president and COO of Convergent Wealth Advisors. “I’ve known people whose friends have, you know, asked them to pay off their cars, take them on trips to the Super Bowl, you name it.”
Pressure to spend big is intense and not all external.
“The individuals themselves begin to feel guilty, feel like they do have to step in and solve a lot of the problems for the people they love. So it’s kind of a two-sided issue” says Luxury Institute CEO Milton Pedraza.
Many newly-wealthy overspend early, then regret it when they get the biggest tax bill of their life. Or they don’t realize IPO wealth isn’t automatic. There are limits on how soon they can cash in stock, and the price might drop before they do.
“The first year’s the toughest year,” says Susan Bradley, founder of the Sudden Money Institute. “After that, you can make a plan and you’ll have months to put the plan into effect.”
As for folks pushing for luxe presents, a polite ‘no’ is good manners and good financial planning.
“You shouldn’t feel pressured to all of a sudden have to buy everyone you know a $500 gift, whereas you used to buy them a $30 gift,” says Lizzie Post, the great-great-granddaughter of etiquette legend Emily Post and co-author of “Emily Post’s Etiquette, 18th Edition.” “It’s just not right.”
She says good friends should treat a newly-minted millionaire the same way as before the payday.
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