Driven away by surging crime, towering taxes, and skyrocketing housing prices, financial corporations overseeing assets worth $2 trillion have bid adieu to New York and California. They’ve set their sights on Texas, Florida, and other Sun Belt regions, where living expenses are reportedly up to 40% less, according to Bloomberg.
From March 2020 to 2023, about 370 prominent investment entities, managing $2.7 trillion — approximately 2.5% of the nation’s total assets overseen by investment firms — shifted their main offices to different states. The financial allure even reached North Carolina and Tennessee, drawing over $600 billion in assets. This was largely influenced by AllianceBernstein’s 2021 relocation from New York to Nashville and Allspring Global Investment’s 2022 move from San Francisco to Charlotte.
This significant relocation wave is impacting both California’s and New York’s tax income foundations and job opportunities in finance. Back in 1990, New York housed 33% of the nation’s financial employment sector. Fast forward to the previous year, and this percentage plummeted to 17.6%.
Other industry behemoths taking the plunge include Charles Schwab, transitioning from San Francisco to Dallas, Icahn Capital Management and ARK Investment by Cathie Wood migrating from New York to Florida, DoubleLine shifting from Los Angeles to Tampa, and Citadel, led by Ken Griffin, relocating from Chicago to Miami.
This large-scale movement has implications for commercial real estate markets in cities like New York, Los Angeles, Boston, and Chicago, which were already grappling with the challenges brought by the hybrid work model.
Amy Liu of the Brookings Institution notes, “The transformation of the Sun Belt isn’t confined to its known sectors like oil, gas, or tourism. The major city centers in these states are increasingly becoming magnets for evolving industries.”
The political leanings of states such as Texas and Florida, which skew Republican, also appeal to some financial magnates. They appreciate the push toward legal migration, stricter abortion regulations, and a revised approach to diversity and environmental initiatives.
David Blumberg, affiliated with Tiger 21, transitioned from California to Florida’s Golden Beach in 2020. As a conservative, he appreciates the receptive atmosphere of his new locale. In his words, social gatherings aren’t disrupted by differing opinions.
The COVID-19 pandemic reshaped perceptions about investment career paths, observes ex-Goldman Sachs trader, Nitin Motwani. Traditionally, financial powerhouses clung to their San Francisco or Wall Street bases. However, the recent trend sees them establishing roots in new territories, drawn by the allure and narrative of these fresh starts.
Job-wise, Florida has welcomed 470 Wall Street professionals, Texas an additional 1,200 investment experts, and Tennessee another 1,000. This influx comprises traders, portfolio heads, fintech leaders, and other top-tier executives, with many boasting impressive seven or eight-figure salaries.
Nonetheless, New York remains a dominant force, managing assets worth $25.6 trillion, which dwarfs Florida’s and even surpasses California’s $15.7 trillion. This commanding position is amplified by market growth in recent times.
In the U.S., regional financial centers like Washington have seen a decline, with Fisher Investments’ exit being a notable example. Connecticut, once a hedge fund darling, has been surpassed by Florida in terms of assets managed.
Financial leaders also spotlight the lack of state income tax in Florida and Texas, amongst others. Beyond fiscal benefits, Wall Street moguls appreciate the enriched lifestyles Texas and Florida offer — from family activities like fishing to hosting expansive dinner parties.
Mattie Parker, Fort Worth’s Republican mayor, believes the presence of established financial giants pre-pandemic helped the city magnetize other firms. Banks are also drawn to the diverse client base found in unconventional locales, remarks John Cummings of Texas Capital Bankshares, who adds, “The dynamic Texas business environment promises diversity. The influx of top-tier companies is testament to that. Talent naturally gravitates towards promising prospects.”
