Financial firms managing a staggering $2 trillion in assets have abandoned New York and California due to surging crime rates, high taxes, and exorbitant housing costs. Instead, they’ve migrated to Sun Belt states like Texas and Florida, where living expenses are up to 40% lower. This exodus is outlined in a Bloomberg report.
Over a three-year period until March 2023, approximately 370 major investment companies, collectively responsible for $2.7 trillion in assets, relocated their headquarters to different states. This shift represents 2.5% of all assets managed by U.S. investment firms. Even states such as North Carolina and Tennessee witnessed over $600 billion in assets moving, with factors like AllianceBernstein’s move to Nashville in 2021 and Allspring Global Investment’s transition to Charlotte in 2022 driving the change.
This movement is impacting tax revenues in New York and California, and also affecting career prospects for finance professionals. In 1990, New York held a significant 33% of all U.S. financial industry jobs, but by the end of last year, that portion had dwindled to 17.6%.
Prominent names shifting their bases include Charles Schwab, leaving San Francisco for Dallas; Icahn Capital Management and ARK Investment led by Cathie Wood, relocating from New York to Florida; DoubleLine moving from Los Angeles to Tampa; and Citadel, led by Ken Griffin, leaving Chicago for Miami.
The fallout extends to commercial real estate markets in cities like New York, Los Angeles, Boston, and Chicago, already grappling with the effects of hybrid work models.
Urban policy researcher Amy Liu, serving as the interim president of the Brookings Institution, notes that the Sun Belt states are transforming beyond traditional industries into attractive destinations for emerging sectors.
Furthermore, some financial professionals find appeal in living in Republican-leaning states like Texas and Florida, where stricter immigration policies, limited late-term abortions, and a recalibration of diversity and environmental initiatives are gaining traction.
David Blumberg, a member of Tiger 21, a network of high-net-worth individuals, relocated from California to Florida’s Golden Beach in 2020. As a conservative, Blumberg feels more at ease in his new environment.
The COVID-19 pandemic has also disrupted conventional notions about investment management careers, as observed by Nitin Motwani, a former trader at Goldman Sachs.