Turning Business Success Into Lasting Security: Lessons From A Tech Founder’s Wealth Management Journey
As part of People Month in October, Tom Freedman Senior Investment Director at Rathbones, shared how he helped a successful tech entrepreneur turn business success into lasting financial security.
Founders of fast-growth companies have distinct wealth management needs. Their financial situation changes rapidly as the business grows and, with wealth typically tied up in the company, they are exposed to heightened financial risk. Tom Freedman of Rathbones specialises in managing wealth on behalf of successful tech entrepreneurs and here he shares how one long-standing client’s wealth was managed to create both financial security and the freedom to explore new opportunities.
From computer science to entrepreneurship
My client is a computer scientist who founded a company that helps retailers understand and engage with customers through data, analytics and AI. Both company and founder are leaders in their field and the business has grown rapidly since inception.
Much of this client’s story will resonate with techSpark’s founder community – the move from academia to entrepreneurship, the clear business vision and single-minded focus on delivering, and the considerable financial exposure of having personal wealth tied up in a single venture.
Where his story may differ is that my client was on the front foot when it came to diversifying his financial risk and laying foundations for the future.
Turning business success into family financial security
I first met him back in 2014 at the time his company was launching on AIM (the Alternative Investment Market). We were introduced by a corporate financier involved in the transaction because, with the company listing on a volatile market, the client had expressed a desire to sell some shares to provide financial security for his family, in particular by setting aside money for children’s education and paying off some mortgage.
My role initially was to advise this client on how to invest the money – what to invest in and the most tax-efficient way to do this, which was to hold the investments in his wife’s name because she was a lower-rate taxpayer. He had already done some financial planning around pensions so we also provided a financial health check but didn’t make any changes at this point.
Over time, as the client’s earnings and the value of his shareholding increased, we continued diversifying risk away from the company. He would sell down shares as they became available and reinvest the proceeds into the portfolio held in his wife’s name.
A wealth strategy across all assets
The Rathbones wealth management service considers all the different and moving parts around your finances to create a joined-up strategy across investments, financial plans, tax strategies and more. For entrepreneurs with intertwined personal and business wealth, this can be especially valuable because decisions taken in one area can have significant consequences elsewhere. The bespoke nature of the service is also key because every client’s situation and goals are different.
A good example of this is how my client accessed financial planning expertise. While many clients want an ongoing relationship with a Rathbones financial planner – as well as their investment manager – to look after their long-term financial plans, this client chose to receive targeted financial planning support as the need arose along his journey.
In 2019 I recommended bringing in a financial planner. The client’s pension had reached a size where it now made sense to manage it together with his family’s wider assets, so the financial planner and I worked together to put in place a broader structure and investment strategy.
Different investment pots for different situations
While this client didn’t have firm plans for the future or a fixed timeline, he always had in mind that he might leave the company, so we managed his money to provide maximum flexibility as well as security. He wouldn’t be touching his pension for some time so we managed this with a higher level of risk whereas assets such as ISAs, which could be accessed when exploring new ventures, had a lower risk profile.
We continued in this vein until 2025 when the client felt ready to step back from his company while remaining as an adviser. He released further funds, which we used to create a new investment pot to support this stage in his journey. Made up of government bonds and gilts, it is very low-risk and liquid and designed for him to dip into if needed, for example for living costs, holidays or to finance other projects.