Florida’s sunshine and low taxes have enticed many hedge funds and other financial professionals to move south. Now another massive hurricane is testing that love affair, but many big-name managers are determined to remain in “Wall Street South” for the foreseeable future.
The state, which faces the approaching Category 3 Hurricane Milton on Wednesday, has attracted investors for years, but its appeal has only increased during the pandemic. Billionaire Carl Icahn moved his company from New York to an office near Miami in 2020. Paul Singer’s Elliott Investment Management followed suit later that year with an announcement that it would open an office in West Palm Beach. And Ken Griffin’s Citadel announced in 2022 that it would be moving from Chicago to Miami.
Hurricane Milton is expected to hit Florida’s Gulf Coast late Wednesday night or early Thursday, threatening communities still recovering from Hurricane Helene last month. Milton is expected to move across the Florida peninsula at hurricane strength, threatening storm surge along the state’s Atlantic coast.
“We took the plunge with our eyes wide open,” said Jack Ablin, chief investment officer of $52 billion Chicago-based Cresset Asset Management, of his move to Palm Beach on Florida’s east coast in 2015. His primary residence will remain in Palm Beach , even as he plans to ride out the storm from his other home in the Blue Ridge Mountains of South Carolina.
For many other fund managers, the trade-off between lower taxes and a favorable business climate versus the specter of insurance payments and the cost of rebuilding potentially destroyed properties still weighs in Florida’s favor, according to people familiar with their thinking.
The big hedge funds that have moved to Florida want to continue operating there, these people said. Other executives who relocated to the South during the pandemic and continue to work for companies in the Northeast also intend to stay put, according to two people familiar with their deliberations.
Other Wall Street financial institutions, including Goldman Sachs and JPMorgan Chase, have increased their Florida staff to serve clients who have relocated and to accommodate employees who want to work from the South.
EVENTUALPLANUNG
Many of the companies that moved – including Citadel, Elliott and Icahn – are based on or near Florida’s east coast, where easy air travel to New York and elsewhere was as attractive as the vibrant nightlife and arts scene Miami. That puts them about 300 miles (483 km) east of where meteorologists say Milton will make landfall and cause the most severe damage after
Hurricane Helene swept through late last month.
Nevertheless, they are working on emergency plans.
“In the event that Miami needs to be evacuated, we have robust contingency plans in place for our employees, their families and our businesses,” said a Citadel spokesperson. But the company’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 vibrant Miami neighborhood that has become the heart of Wall Street South.
However, a handful of companies from the financial sector are located in the immediate area of Milton.
A founder of an $8 billion fund on Florida’s west coast flew into the state to keep an eye on both his company and his home and is now planning to ride out the storm on a high floor of his office building, according to people, who are familiar with his ideas.
Another company affected by the storm is Raymond James Financial, which was founded and is still based in St. Petersburg. The 62-year-old brokerage and investment advisory firm evacuated its employees from its headquarters on Tuesday.
The company is maintaining service and support in alternate accommodations and a spokesperson declined to comment further on social media communications.
Blue Ocean Technologies ATS, a Florida-based financial technology company that operates an overnight trading system for U.S. securities, is headquartered north of Miami in West Palm Beach and has a backup plan.
“I’ve lived here for 10 years, and the hurricanes have missed me for 10 years,” said Brian Hyndman, president and CEO of Blue Ocean. The company’s trading system, its trade matching engine, is based in New Jersey. “We are able to work from home and have assistance and support on both the East and West Coasts of the United States.
LONGER TERM EFFECTS?
Two sources familiar with executive recruiting in Florida told Reuters they were concerned that experienced employees would no longer want to take on the growing costs and risks of living in a hurricane zone that hiring employees could become more expensive or more difficult.
According to data from Benjamin Keys of the University of Pennsylvania and Philip Mulder of the University of Wisconsin, average homeowners’ insurance premiums in Florida will increase by 57% between 2019 and 2023, more than in any other state. Keys said the average cost of insurance last year was $4,060.
Mel Montagne, president of FIRM, a nonprofit that advocates for fairer insurance rates for Floridians and also sells commercial insurance, said customers have become nervous and are plagued by buyer’s remorse.
“They look around and say, ‘What the hell is that?'” said Montagne, whose clients include financial industry executives who moved to Florida during COVID.
“They want to sell to get out of the way.
