Everyone Is Moving to Florida. What That Means for Financial Advisors and Their Clients.

In Homrich Berg’s case, the firm set up shop in Palm Beach, where it hired a three-advisor team, which previously managed more than $1.5 billion in assets at GenSpring SunTrust Private Wealth, to staff a new office.

Homrich Berg isn’t the only one eyeing opportunities in the Sunshine State.

Florida’s population—particularly in the Miami, Orlando, and Tampa metro areas—has mushroomed, topping 21 million in 2020, a 14.6% increase over 2010 and nearly twice the nation’s growth rate of 7.4%, according to the U.S. Census Bureau. While Florida is known for its retirement communities, it’s not just senior citizens that are moving in; wealthy people and financial services firms are decamping for a state that boasts a lot of sunshine, beaches, and low taxes. (Florida also does not have income or capital gains taxes, and lower-than-average property taxes.) Wealth managers have followed suit, opening satellite offices, expanding existing branches, and even relocating headquarters to the state. Among the firms that have been moving in or expanding in Florida: Merrill Lynch, CI Financial, and Dynasty Financial Partners.

“Little Old Ladies”

Some longtime Florida-based advisors say they’ve noticed a shift in client demographics. “When I was coming up in the industry, our marketplace was little old ladies in retirement. Most were from the Midwest,” says Matt Kilgroe, an advisor since 1991 and CEO of Cyndeo Wealth Partners, an independent firm based in St. Petersburg.

Kilgroe, whose firm has more than $1 billion in assets, says the local wealth management marketplace has changed dramatically. “The number of clients I had in my first 10 years of business who were still working was probably 15%. Today, that number is closer to 60%. You’ve had a whole transformation of what an advisor’s book looks like in St. Petersburg,” Kilgroe says.

The state has long been home to advisors catering to retirees, as well as Raymond James Financial, which fields thousands of advisors across the country and is headquartered in St. Petersburg.

More recently, the number of advisory firms headquartered in Florida has been increasing. About 5% of registered investment advisory firms moved their headquarters to the state from April 2020 to April 2021, according to research from SmartAsset, which examined RIAs’ regulatory filings with the Securities and Exchange Commission. The majority of movers nationwide were small advisory firms, with assets under management of less than $10 billion, according to SmartAsset.

Some of that nationwide movement was Covid-related, and not all of it was in Florida’s direction. Connecticut was a big winner of RIAs relocating, while New York City was a big loser, experiencing the largest decrease in the number of RIAs headquartered there from 2020 to 2021, according to SmartAsset.

Technology has played a key role in advisors’ moves. “A lot of clients really prefer the remote style,” says Josh Strange, an independent advisor who moved to central Florida from northern Virginia in 2021.

Strange, who runs Good Life Financial Advisors of NOVA, says he made the move in order to be closer to his family. He has flown back to Virginia for client meetings. Of the roughly 140 households he serves, about 70% of them remain in Virginia, he says.

“It has been a good business move,” Strange says. “It’s harder if you’re just starting out, but if you have an established practice and you’ve done well for your clients, then I don’t think it’s an issue at all. What’s a $300 plane ticket to land a million-dollar prospect?”

Florida’s low tax environment isn’t just a draw for clients, says Shirl Penney, CEO of St. Petersburg–based Dynasty Financial Partners. “When you decide to sell your RIA, do you want to be in a state that has no capital gains tax?” Penney asks.

Penney moved his firm, which provides RIAs with technology and other services, to St. Petersburg from New York in 2019. The area has the right talent mix and business ecosystem, he says, pointing to other major firms in the area, such as Raymond James Financial and Cathie Wood’s ARK Invest. “We wanted to position the business to accelerate investment in technology and other things by lowering the fixed costs of the business,” he says.

On the Move

While some independent advisors are relocating to the state, larger wealth management firms are making moves of their own.

Bank of America’s Merrill Lynch is expanding its operations in the state, hiring more staff, and managers. The wirehouse has been picking up clients in the state—4,000 new households since the beginning of the year.

Several factors make Florida an attractive destination for high-net-worth and ultrahigh-net-worth clients, says Josh Moody, who oversees Merrill Private Wealth Management in Florida, the firm’s unit that caters to ultrawealthy clients.

“You’re seeing people who are planning to sell their family business migrate to Florida. Plus, with the population growth, which has been immense, you’re seeing companies come in and try to attract those folks. So, it’s not just retirees,” says Moody, who has been with Merrill Lynch for 23 years, and has worked in Florida since 2007.

When CI Financial, a fast-growing Canadian wealth and asset management firm, decided to open a new U.S. headquarters, “Miami came to the top of the list,” says CEO Kurt MacAlpine, whose firm will occupy a newly built, 25,000-square foot office space next year.

The Toronto-based firm considered several locations, including Dallas, but Miami stood out for its population growth, its popularity with Canadian snowbirds, and the growing number of financial services firms calling the city home, says MacAlpine, pointing to venture capital, crypto, and alternative investments firms.

“Part of our strategic plan is to get deeper into alts as our high-net-worth and ultrahigh-net-worth business grows. So, when you think about pockets of talent—what we are focused on—[then] Miami seems to be lining up really well,” MacAlpine says.

Headwinds

Of course, factors such as climate change could imperil the state’s appeal. And the run-up in real estate prices may cause some Americans on the move to look elsewhere, which would complicate wealth management firms’ expansion efforts. It’s even causing some Floridians in the Miami area to look for cheaper housing elsewhere in the state.

“It’s on fire down there,” says Homrich Berg’s Carroll. “You would think that with more firms embracing a work-from-home culture, commercial real estate would not be difficult, but we ran an exhaustive search in Palm Beach County, and there were very few places that we wanted to be in and that had availability.”

Homrich Berg’s staff is occupying a temporary space while the firm sets up its new office. “It’s a six-to-eight month buildout of our permanent space. It depends on how supply chains move, but we hope to be there in the middle of next summer.”

When Dynasty Financial was looking to relocate from New York in 2019, the firm considered Miami but decided it wasn’t worth it. “The cost of real estate was almost as high as New York,” says CEO Penney.

Dynasty Financial and about 85 employees eventually moved into a 17,000-square-foot office in St. Petersburg. The cost of real estate is about 60% lower than what Dynasty paid for its previous location in Midtown West, says CEO Penney.

Finding the right talent to expand in Florida can also be challenging, executives say. It took Homrich Berg about a year to find the right team for its new Palm Beach office, according to Carroll. “It takes a while to get talented individuals to make a change,” he says. “There was a lot of due diligence that they wanted to do, and a lot for us.”

Geneva-based Brainvest Wealth Management, which oversees $3 billion for American and international clients, opened its first U.S. location about five years ago—in Miami. The office has seven staff members, and founding partner Dany Roizman would like to hire more, but has had trouble landing employees with the right skill set, he says. The firm is bringing over an employee from Switzerland to Florida.

But the challenge may ease with time and population growth, he says.

“The more people you have, it means you can attract more and better talent. We’re seeing this now in Miami, and it wasn’t the case five years ago,” says Roizman, whose firm recently sold a minority stake to Merchant Investment Management to fuel its expansion efforts.

Although advisors can meet with clients remotely, there’s still value in having an in-person presence, says Homrich Berg’s Carroll. “We can serve clients from Atlanta, and we have been doing that for a long time, but it’s certainly impactful when people can experience your brand in person,” he says.

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