Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Industry Spotlight > Women in Wealth

Advisors ‘Following the Money’ to New, Underserved Markets

Your article was successfully shared with the contacts you provided.

One year ago, fed up with California’s politics and taxes, advisor John Graves decided to look elsewhere to live and work.

Graves grew up in the South, his wife, Sharon, in the Midwest. “Our quest turned into a ‘Where do you want to fly this month, honey?’,” says Graves, managing principal of The Renaissance Group, an advisory practice in Ventura, Calif., with $560 million in assets under management. Graves, 65, is an adventure traveler who has visited more than 84 countries. No surprise then that he conducted his search for The Next Best Place with vigor.

Suburban Virginia outside of Washington, D.C.? Too much traffic. Maryland, with the nation’s highest percentage of millionaires per capita, had a mosquito problem. Florida? Hot and muggy—plus it’s overserved by financial advisors. Texas? Hot and dry. Alabama had an attractive cost of living but, again, the weather. Coastal South Carolina was lovely, only it didn’t have an abundance of underserved high-net-worth households.

Ultimately, Graves settled on Raleigh, N.C., which he likes because of its affordable cost of living, diverse political makeup and an underserviced high-net-worth market in the Raleigh suburbs. He is currently looking to buy an advisory business there—although he will continue to service his 89 clients in California through Skype and quarterly visits. His California staff will also remain in place.

Graves, it turns out, is at the forefront of a trend that represents a potential industry game changer: the shift of finance jobs from traditional financial centers like New York City, Chicago, San Francisco and Los Angeles to places like Raleigh. In a survey last year of the “Best Cities for Jobs in Finance Industries,” Richmond, Va., and Pittsburgh placed first and second, respectively, among the 66 largest metro areas in the country. Raleigh ranked 49th, three spots above New York City.

Futurist Joel Kotkin, executive editor of and a co-author of the survey, says the financial services industry appears to be undergoing a “profound” geographic shift away from traditional money centers. What’s driving it? Cost-cutting by firms and the growth of educated workforces in many smaller metropolitan areas. The linguistic skills of a largely Mormon workforce in Salt Lake City, for example, have attracted the presence of big financial firms that need employees who speak Lithuanian, Chinese and Tagalog. Salt Lake City ranked 12th in the survey.

A parallel trend that Kotkin says will grow legs over the next decade is the migration of young adults and aging baby boomers to so-called “second-tier” cities.

For young adults, the move is all about getting more bang for their employment buck. As Kotkin puts it: “If you make $110,000 a year in Salt Lake City, you live really well. If you make $110,000 a year in San Francisco, you live in a closet.” Boomers, meanwhile, are looking to preserve their nest egg.

“If we all had endless money we could all live in Manhattan or Boulder but most of us have to make other choices. How would Columbus, Ohio, be? Maybe I don’t want to live in a dying Rust Belt city but how would a restored neighborhood in Richmond be or a leafy suburb outside St. Louis? That begins to become a value proposition,” says Kotkin.

“The firms are going to have to follow where the aging boomers are going. That’s a population that will start to move even more as cohorts get larger and they are going to wind up in all sorts of unexpected places. If you are an advisor serving the 1% or the 0.5%, you’re going to be fine in New York, San Francisco and the Gold Coast of Chicago,” he adds. “But the real contest is going to play out elsewhere.”

Geographic Strategies

A number of firms, large and small, have begun to develop geographic strategies to help them grow their business. The big reveal: Opportunity exists, literally, all over the map.

Tash Elwyn, president of Raymond James & Associates’ Private Client Group, looked at that map and here’s what he saw: the West Coast, where 22% of the industry’s assets under management are held. Here’s what he didn’t see: a sufficient RJ&A presence.

Just under two years ago, the St. Petersburg, Fla.-based broker-dealer began its push westward in earnest, opening new branches in California, Washington and, most recently, Oregon. The firm is also considering Tulsa, Baltimore and Boston as possible expansion sites.

“Geography absolutely is a big piece of the puzzle in terms of how we develop our growth strategy,” Elwyn said. “There are definitely different markets in the country in which Raymond James & Associates is either not yet in or has not yet developed a market as fully as we believe we are capable of.”

When it enters a new market, RJ&A doesn’t open a branch that looks cookie-cutter corporate. It really does go native.

As an example, when the Portland, Ore., office opened in October, the local advisory team decided to forego a traditional downtown high-rise in favor of office digs in a restored brewery in the city’s jumping Pearl District. The neighborhood has become a destination for restaurants, high-end retail, galleries and tech companies. RJ&A was one of the first national wealth management firms to move into the neighborhood.

Elwyn observes: “Local knowledge is imperative. Our managers and advisors can give us guidance we need about not just what communities to be in, but where in those communities to be. Far be it for us in St. Petersburg, Fla. to make the decision about whether to be in town or in the suburbs, on the top floor or the bottom floor. Every community has its own flavor.”

Two other firms—the well-established Argent Financial Group and relative newcomer Fusion Wealth Management—could not be more different but both are investing in serious geography plays.

Argent, a southern heavyweight headquartered in Ruston, La., has just short of $6 billion in assets under management. By contrast, the three-year-old Fusion, based in Phoenix, manages $56 million in assets. Yet both are “following the money” to places like Ohio, Texas, Tennessee and Kentucky.

“We have focused on expansion through niche opportunities—many of which are driven by a geography’s contribution to a client’s source of wealth and/or unique opportunities afforded within a geography,” notes J. Phil Buchanan, Argent’s president. “When you are near the client’s source of wealth and you speak the same language as the client, you connect.”

So when the shale oil boom hit in southwest Louisiana a few years ago, Argent created a property services group to advise client landowners on their negotiations with real estate and oil companies. Or, as Buchanan puts it, the firm helped clients “monetize” their newfound wealth. Similarly, Argent moved into Texas to address the emergent wealth created by the oil and gas industry there. Argent also opened offices in Nashville and Louisville because of their high concentration of health insurance, medical technology and hospital groups. And it established a presence in Tennessee specifically to advise on the state’s situs laws involving asset protection.

While Argent does not plan to expand beyond its southern footprint, Buchanan says: “We see a lot of great opportunity within that footprint. It excites me to see clients in our footprint creating wealth. It’s long overdue.”

Fusion, meanwhile, has used its own geography to great advantage—courting local tech entrepreneurs and professional baseball players in Phoenix every year for spring training. It has also made two big pushes: one to San Francisco to capitalize on its expertise with serial entrepreneurs and the other to the Toledo, Ohio, area where, through a referral from an Arizona client, the firm connected with a cluster of high-level executives at major corporations. Fusion plans to open a Toledo satellite later this year.

“For any advisor truly looking to grow something, you have to take advantage of any geographical assets that come up. What we’ve done is expand in natural markets,” says Dustin Giannangelo, co-owner of the firm. At the moment, half of Fusion’s clients operate outside of Arizona. “We look at this as just a starting point.”

Virtual Places

Any conversation about the shifting geography of financial advice should also include something that has no borders or bricks and mortar: the Internet.

FutureAdvisor, a four-year-old robo-advisor backed by the venture capital firm Sequoia Capital, is targeting young urban professionals on promising career tracks, many of them working in West Coast tech. The firm, a passive investment advisor that manages $60 million in assets, has also seen a demographic spike in both young parents and pre-retirees moving through their 50s. The average account size is $137,000.

“The first attempt at moving people online for wealth management occurred in the 1990s. It didn’t work. People weren’t comfortable with the concept. Now, 20 years in, a whole new generation has entered the workforce and they are earning money and saving it,” says spokesman Chris Nicholson. “They’ve been on iPhones for many years and on computers for many more years. They’re comfortable being online.”

Because of the focus on small account balances, Nicholson adds that firms like FutureAdvisor are not competing with traditional financial advisors. Rather, he says: “We see an entirely new type of financial advisory firm getting really large in America. Players in this industry will one day be household names.”

Then there are folks like Michael Solari, a certified financial planner just starting out who heads Solari Financial Planning in southern New Hampshire. With Google getting over 15,000 searches a month for “certified financial planner,” Solari created a website to draw in traffic. He blogs. He follows Jerry Seinfeld and financial journalist Jean Chatzky on Twitter, whom he often retweets. And he has had inquiries from potential clients from as far away as Ohio. He just opened a 529 for someone in South Korea through Skype.

“I believe the best place for advisors to be is on the Web. More and more prospects are vetting advisors based on what information is provided there,” says Solari. “People are actually looking outside the bounds of their geographical location to find advice. Instead of you knocking on their doors, they are knocking on yours. That’s the new geography.”

Rising in Pittsburgh

Who knew? Financial services, of all things, is now the largest contributor to the Pittsburgh region’s GDP, according to

That Pittsburgh ranked No. 2 out of 66 large metro areas in a “Best Cities for Jobs in Finance Industries” survey comes as no surprise to Jim Holtzman, personal CFO and shareholder of Pittsburgh-based Legend Financial Advisors, currently celebrating its 20th anniversary.

Since the steel industry tanked in the 1980s, Pittsburgh has worked hard to reinvent itself. Collaboration and innovation have both played big roles. Today, Holtzman says, the city is known for a strong university presence, thriving medical community and tech players like Google and Apple. PNC is the nation’s fifth-largest bank, and out-of-state wealth managers have begun to open shop.

The Marcellus shale is also minting new millionaires. The energy business has become so robust, in fact, that oil companies have been forced to import their own talent. And that has led to a major hotel boom with some forward-thinking hotels offering drillers “cleaning stations” and breakfasts that start at 2 a.m.

“I’m not surprised that we rank No. 2,” says Holtzman, whose firm manages about $300 million in assets. “I see it day to day here.”

A San Diego View

“I don’t know if my business would have worked out as well if I’d stayed in New York. My guess is it would have been too tough. It’s like trying to sell groceries when there are four grocery stores on every corner,” says Kevin Clewley, who heads K.D. Clewley Capital Management in San Diego. “There’s so much groupthink in a financial center like New York. With thousands of people analyzing stocks, there’s not that much to add. Being out here, and doing things my own way, I’ve realized I have a lot to add.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.