Financial Firm Migration Takes $1T Each Out of NY, CA

A huge price tag has been assigned to the cost of the exodus of financial firms from New York and California during the past three years, at least in terms of the value of the assets they manage.

According to a new study from Bloomberg News—which says it has reviewed corporate filings from more than 17,000 firms since the end of 2019—NY and CA each have lost firms that managed assets encompassing $1 trillion.

The financial sector exodus also has translated into the loss of thousands of high-wage jobs, valuable tenants for commercial property markets and much-needed tax revenue, the report said.

Since Q1 2020, 158 companies managing $993B in asset have moved their headquarters out of NY, with 56 of these firms heading to Florida. Texas is the top destination for investment firms leaving California.

Bloomberg’s report is quick to note that NYC remains a top global financial center, but the migration to southern hubs is fueling booms in Dallas and Miami.

In Dallas, the finance industry rapidly is expanding with new campuses welcoming thousands of employees for Goldman Sachs Group and Wells Fargo, who arrived after Charles Schwab moved its headquarters to Big D in 2020.

According to the report, are “often born out of a desire for lower taxes, warmer weather and cheaper mansions.”

The corporate filings revealed that from the beginning of 2020 through the end of March 2023, more than 370 investment companies—about 2.5% of the total in the US, encompassing $2.7T AUM—have moved their HQ to a new state.

The lion’s share of these relocations involved moves from Northeast and West Coast locations with high cost of living to Florida, Texas and several Sun Belt states.

When some of the largest players in the industry pull up roots and move they bring piles of assets with them. For example, North Carolina and Tennessee each added more than $600B in assets largely from two relocations—Allspring Global Investment, which moved to Charlotte from San Francisco last year; and AllianceBernstein, which moved to Nashville from NY in 2021.

According to the report, Washington, Illinois and Connecticut each have lost up to $500B in assets held by investment firms relocating to other states. Florida, Tennessee and North Carolina have registered the largest gains from new financial sector arrivals.

While the bulk of the movement of financial firms is heading south, western states including Nevada, Wyoming, Colorado and Arizona also are seeing an influx of finance players. Companies that migrated to Florida from New York included Icahn Capital Management and ARK Investment; Citadel moved to Miami from Chicago.