Many financial advisors are changing cities, or even states, in search of less expensive digs during the pandemic, according to a study by SmartAsset.
The coronavirus has compelled advisors to look for office space that is more affordable and more suitable for a time when employees are working from home, according to SmartAsset.
The website found that the Covid pandemic has sparked a mini-exodus from New York City and that many firms’ new headquarter destination of choice is Florida.
SmartAsset found that changes in headquarter locations were more common among smaller advisory firms, in terms of both AUM and the number of offices open for business. Almost 96% of RIAs with less than $10 billion in AUM reported a change in HQ to the SEC over the past year, and 54% of that group moved their entire practice, closing any branch offices. In comparison, most larger firms that moved had planned to do so before the Covid-19 outbreak, the study said.
SmartAsset also found that more than one in five RIAs changing the location of their headquarters were moving out of New York City between April 2020 and April 2021. As of April 2020, 1,730 RIAs were registered with headquarters in New York City, but that number fell to 1,665 by April 2021. In total, 73 advisory firms left the nation’s biggest metropolis during the pandemic, while just 11 moved there over the same period, according to SmartAsset.
San Francisco and Chicago also saw a decrease in the number of RIAs headquartered in their cities, but the drops were less when compared with New York City. Nine RIAs left San Franciso, while six deserted the Windy City. Portland, Ore., and Indianapolis rounded out the top five firms losing RIA headquarters.
Miami has become the change-of-address destination of choice for financial advisor firms shuffling their headquarters locations during the pandemic, SmarAsset found. From April 2020 to April 2021, the number of RIAs opening up shop in Magic City rose from 96 to 104, with 10 firms moving in and two moving out. Just 75 miles north of Miami, Florida’s West Palm Beach also gained popularity as a new destination with RIAs over the past year.
In addition to Miiami and West Palm Beach, Fla., RIAs were moving their headquarters to Stamford, Conn., Carmel, Ind., and White Plains, N.Y. Stamford is about 40 miles from New York City, while White Plains is just 35 miles north, making both cities a convenient alternative location. And at 23 miles north of Indianapolis, Carmel is the new headquarters destination of choice for Midwestern firms.
On the state level, Florida and Connecticut benefited most from RIAs’ change of address to their states. Between 2020 and 2021, the number of RIAs with headquarters in Florida increased by 25 (4.90%), and in Connecticut by 11. During the same time, 45 RIAs left New York State amd 18 left California. But despite the loss of business, both states remain the top two most popular for RIA headquarters, SmartAsset said.
To find out just how many firms have moved out of their previous headquarters and relocated them elsewhere, SmartAsset examined 10,955 financial advisory firms’ Form ADV filings with the U.S. Securities & Exchange Commission (SEC) from late March to early April 2020 and 2021.