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Miami’s Downtown Development Authority and other business entities have made a concerted effort to woo hedge funds and other financial services firms to the area, and the effort is paying off, observers say.
“South Florida has recently experienced a major inflow of hedge fund and private equity firms,” said Bowman Brown, partner in the Miami office of Shutts and chairman of the firm’s Financial Services Practice Group, via email.
“High tax rates in New York, Illinois, Connecticut, New Jersey and California have driven hedge fund and private equity firms to South Florida. The impact is enormous. Sophisticated financial professionals staff these entities and are moving in droves to South Florida with the firms that employ them. They are buying high-end houses and apartments, are focused on getting their kids into private schools, and are lining up to join country clubs. This will attract a substantial number of sophisticated financial professionals into the South Florida business community, and will substantially increase economic activity here.”
“We are seeing more and more hedge fund activity coming to Florida from the Northeast due to the softer tax implications offered in the state of Florida,” said Frank Gonzalez, principal-in-charge of MBAF’s audit department and leader of the firm’s Financial Institutions and SEC practices, via email. “The incoming flow of these hedge funds has provided more business for financial services companies and accounting firms, as more and more financial advice and tax/accounting services are needed by these funds and for their customers. We are seeing more and more work being performed by financial institutions and accounting firms with hedge funds. This has been a very welcome situation for the Florida business market, as additional services are being provided. We are seeing an increase in specialized services that cater to dealing with hedge fund accounting, tax services and financial advice, including firms enhancing and promoting these niches at their firms.
“The hedge fund arrival into Florida has definitely added high-paying job opportunities in that there are more specialized individuals needed to serve this industry and assist them with their services. I believe this has not only produced more higher-paying jobs for locals in the state of Florida but has also produced the relocation of people with hedge fund expertise to move to the area” he said.
“This field is expanding as, from an accounting firm perspective, we are seeing more and more opportunities to provide services to hedge funds, from accounting and tax perspectives. Many accounting firms are developing or continue to develop/enhance their hedge fund niches.
“From a tax standpoint, it’s very simple: Florida offers significant tax incentives for hedge funds to relocate due to not having the state tax issues that these funds face in the Northeast states,” he continued. “We see this across the board for many industries, not just the hedge fund sector. Although we have seen a significant amount of hedge fund institutions moving or setting up shop, especially in the South Florida area.”
“The tax savings is going to have a huge impact on bringing hedge funds here,” said Raul Garcia, financial services principal at Kaufman Rossin and chair of the Miami Finance Forum, via email. “[Principals and employees] can save tens of thousands of dollars, and they will see that they should be moving out of these areas. There’s a tremendous opportunity, because they can operate a business here without missing a beat. The real benefit to our community is going to start coming down the road; we haven’t really begun to see it yet. The trickle-down effect bodes well for us.”
The impact of hedge funds entering the South Florida market has become evident to him in several ways, said Joshua M. Stone, an attorney with FundsLawyer PLLC, who is a board member of the Miami Finance Forum, via email.
“[It’s evident in] the people I speak with at industry group events, such as Hedge Fund Association programs, the discussions I have through my law practice and from the new families we meet through my children’s school.
“There certainly has been an influx of hedge-fund jobs, as well as an increase in work for outsourced service providers like myself. There is also a growing interest in the Florida market by national and international hedge-fund service providers, such as offshore law firms, prime brokers and fund administrators, some visiting on a regular basis and others setting up offices in Miami, in the past few years.
“All of this activity has and will continue to stimulate the local economy and strengthen Miami’s profile as a financial hub.”
https://www.miamitodaynews.com/2020/03/17/sophisticated-professionals-flood-into-miami-with-hedge-funds/
