The volley of competing messages about how best to work with clients during the pandemic is getting confusing.
Some Wall Street banks, including
More forgiving competitors, including
Amid the dueling directives, some financial advisors see a magic formula. It centers on moving to no-tax Florida, the self-styled “Wall Street of the South” brimming with affluent retirees, and it goes something like this: The COVID-19 pandemic has shown that wealthy, older clients generally want to meet with their advisors face-to-face. At the same time, an advisor who lives in Florida has an ultra-short commute and more after-tax money to play with, leaving plenty of time to enjoy the state’s sunny, relaxed lifestyle.
“The wealthier clients like to see you more and have more meetings with you over the course of the year, rather than see you on a screen,” says Thomas MacCowatt, a CFA and partner at Williams Jones Wealth Management who decamped from New York to Palm Beach, Florida, in 2018. With no commute (the total daily haul between Connecticut’s Gold Coast and New York can stretch three hours or more), after-hours activities like golf, beaches, fishing and professional sports events become the norm.
The 2017 tax law’s $10,000 SALT cap on state and local tax deductions (including property taxes) spurred some wealthy clients to flee high-tax Connecticut, New Jersey and New York for Florida. President Joe Biden’s
A commute of two blocks vs. three hours
Affluent boomers have been abandoning northeastern states and the Midwest to Florida in search of the good life in retirement for decades.
Increasingly, their advisors are following them, leaving behind the high taxes of Manhattan, New Jersey and Chicago and the daily grind of a big-city office.
Eliminating the step-up in basis for calculating taxes may not become law, but it’s worth exploring options with your small enterprise-owner clients, says Sophia Duffy.
The ranks of investment advisor representatives (IARs) in the state have skyrocketed. Florida has 7,284 advisors with active licenses as of June 30, up nearly 27% from 5,754 five years ago, according to the state’s Office of Financial Regulation. That’s a rise of nearly 7% on the 6,835 in June 2020, months after the pandemic began. Over 10 years, the number of active IARs has risen 56%.
(Meanwhile, the number of broker-dealers with active licenses in the state continues to shrink, in line with a national trend, to 2,316 as of June 30 from 2,580 five years ago and 2,906 a decade ago. )
Recent transplants include Benefit Street Partners, a $32 billion asset management firm, which
“I have a very easy commute,” MacCowatt says — two blocks, compared to 2½ hours when he lived in New Jersey.
The drawbacks
But not everyone can — or wants — to make a permanent leap south.
The conservative state, where many remain unvaccinated, leads the nation in infections with the COVID
Paul Strid, the founding principal and CEO of Concentus Wealth Advisors, an RIA in Newtown Square, Pennsylvania, says his young children in school and ties to Philadelphia rule out a move. Instead, he spends weeks at a time working remotely from Florida.
He has a survey on his side: Three out of four finance and insurance professionals could work remotely with no productivity loss, the most of any sector, according to
COVID, demographics shift the industry
Experts say the shifts make Florida a window onto how the wealth management industry is evolving as both clients and their advisors reassess their approaches to what works for both sides. It’s a lesson both for wirehouses —
Old-line wealth managers like J.P. Morgan Private Bank, First Republic and Bessemer have been in Florida for decades. “A lot of the legacy wealth management business was built in the Northeast and West Coast,” says Christopher DeLaura, the president and CEO of Fieldpoint Private Securities, the SEC-registered brokerage arm of Greenwich, Connecticut-headquartered Fieldpoint Private. “When clients go down to Florida, they want to work with someone local.” Fieldpoint opened offices in Orlando and Miami in January 2020 and September 2020.
Aging boomers and future millionaires
Though RIAs are showing record growth and frequently steal brokers away from wirehouses, Florida is relatively-untapped terrain for them. Shirl Penney, the founder, president and CEO of Dynasty Financial Partners, a network of independent advisors that bills itself as a home-away-from-home for out-of-state advisors with local clients, calls the state “a wide-open market” for advisors breaking away from wirehouses. “Advisors are having clients migrate to Florida, so they need a presence,” he says.
Since Dynasty
Penney recently hosted advisors from Octagon Financial Services, a McLean, Virginia-based RIA catering to professional athletes, and one of their star clients, MLB’s All-Star first basemen Carlos Santana of the Kansas City Royals. (Octagon doesn’t have a Florida office.) Florida means the fun comes with the business. Penney says Santana gave his 15-year-old daughter an autographed baseball bat.
Meanwhile, it’s not just aging, affluent boomers who say “I quit” to Chicago winters and move south. Younger clients are also making the switch, advisors say.
“A lot of people look at Florida as where you go when you’re wealthy and retired,” says Fieldpoint’s DeLaura. “But there’s tremendous wealth creation going on in Florida.” Citing Miami’s tech industry, he says that those on the cusp of wealth in the state “are a prime market.”
