Florida's financial community committed to Florida, defying hurricanes
10/10/2024 6:11
Florida's sun and low taxes enticed
many hedge funds and other financial professionals to move
south. Now another massive hurricane is putting that love affair
to the test, but many big-name managers are committed to
remaining in "Wall Street South" for the foreseeable future.
The state, facing the approaching Category 3 Hurricane Milton on
Wednesday, has lured investors for years but its attractiveness
only increased during the pandemic. Billionaire Carl Icahn
uprooted his firm from New York to an office near Miami in 2020.
Paul Singer's Elliott Investment Management followed later that
year with an announcement that it was opening a West Palm Beach
office. And Ken Griffin's Citadel said in 2022 that it was
moving to Miami from Chicago.
Hurricane Milton is on course to pound Florida's Gulf Coast late
on Wednesday night or early on Thursday, threatening communities
still recovering from Hurricane Helene last month. Milton was
expected to stay at hurricane strength across the Florida
peninsula, posing storm-surge danger on the state's Atlantic
Coast.
"We took the plunge with our eyes wide open," said Jack
Ablin, chief investment officer at $52 billion Chicago-based
Cresset Asset Management, about his move to Palm Beach on
Florida's east coast in 2015. His principal residence will stay
in Palm Beach even though he plans to ride out this storm from
his other home in the Blue Ridge Mountains of South Carolina.
For many other fund managers, the tradeoff between lower
taxes and a favorable business climate versus the specter of
insurance payments and the cost of rebuilding potentially
annihilated real estate, still works in favor of Florida,
according to people familiar with their thinking.
The big hedge funds that moved to Florida remain committed
to maintaining their operations there, those people said.
Similarly, other executives who moved their personal residences
to the South during the pandemic while continuing to telecommute
for firms based in the Northeast have every intention of staying
put, according to two sources familiar with their thinking.
Other Wall Street financial institutions, including Goldman
Sachs and JPMorgan Chase, have built up staff in
Florida both to serve customers who moved and to accommodate
employees eager to work from the South.
CONTINGENCY PLANNING
Many of the firms that moved - including Citadel, Elliott
and Icahn - are based on or near Florida's east coast where easy
flights to New York and other locations were a draw, as was
Miami's bustling nightlife and vibrant arts scene. That has put
them some 300 miles (483 km) east of where forecasters expect
Milton to make landfall and wreak the most serious damage after
Hurricane Helene swept through late last month.
Still, they are working on contingency plans.
"If the need to evacuate were to arise in Miami, we have
robust contingency plans for our employees, their loved ones and
our businesses,” said a Citadel spokesman. But the firm's
commitment to Florida, where founder Griffin was born, is clear.
The company plans to build a 54-story tower as its new
headquarters in Brickell, the buzzing Miami neighborhood that
has become the heart of "Wall Street South."
A handful of financial industry firms, however, are based in
the immediate path of Milton.
One founder of an $8 billion fund on Florida's west coast
flew in to the state to keep an eye on both his firm and his
home, and now plans to ride out the storm on a high floor of his
office building, people familiar with his thinking said.
Another firm in the path is Raymond James Financial
, founded and still based in St. Petersburg. The
62-year-old brokerage and investment advisory firm evacuated
staff from its head office on Tuesday.
The firm is maintaining service and support at back-up
facilities and a spokesman declined to provide additional
comment to its communications on social media.
Blue Ocean Technologies ATS, a Florida-based financial
technology company operating an overnight trading system for
U.S. securities, has its executive offices just north of Miami
in West Palm Beach, and has a backup plan.
"I've been living here for 10 years, and the hurricanes have
missed me for 10 years," said Brian Hyndman, president and CEO
of Blue Ocean. The firm's trading system, its trade-matching
engine, is based in New Jersey. "We can work remotely from home,
and we've got backup and support on both the east and west
coasts of the United States."
LONGER-TERM IMPACT?
Two sources familiar with executive recruiting in Florida
told Reuters they are concerned that experienced staff may
become more reluctant to shoulder the growing expense and risk
of living in a hurricane zone, and that hiring may become more
costly or difficult.
Average homeowner premiums in Florida rose 57% between 2019
and 2023 according to data from Benjamin Keys of the University
of Pennsylvania and Philip Mulder of the University of
Wisconsin, a steeper rise than anywhere else in the nation.
Average insurance costs were $4,060 last year, according to
Keys.
Mel Montagne, president of FIRM, a nonprofit that lobbies
for fairer insurance rates for Floridians, and who also sells
commercial insurance, said clients have been getting nervous and
wracked with buyer's remorse.
"They are looking around and saying, 'what the hell is
this?'" said Montagne, whose clients include finance industry
executives who migrated to Florida during COVID.
"They are looking to sell to get the hell out of Dodge."
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