Want A Career On Wall Street, Plan On Moving From New York City

GMngmt's picture
Rank: Senior Orangutan | 488

When you finally make it BIG landing your first Wall Street gig and you think you want to be in it for the long-haul you had better pack your board shorts and Hawaiian-themed shirts because a mid-level career on Wall Street is likely to lead you to hot and humid southern cities like Jacksonville, Florida or Research Triangle Park, North Carolina unless you end up being among the minority of elite traders or investment bankers. Why? It may be that New York has the fourth highest marginal tax rate in the nation. Perhaps it's because housing costs four times higher than the national average. Maybe it's just the plain fact that it's the most expensive city to live in the United States, according to Kiplinger's. But that's not really Wall Street's problem, right? Wrong! And here's why...



Increasingly, regional offices are performing more of the sophisticated work usually associated with Wall Street (WS) and departments such as accounting, human resources, legal support, and trading are according to partner James Malick of Boston Consulting Group, the

...vast middle tier positions that form the backbone of employment of Wall Street."

He expects to see acceleration in the future and notes that there are many more positions in the middle of what he calls the WS jobs pyramid than on the top concluding that these are the support people that actually make the stuff work.

Gary Cohn, President of Goldman Sachs describes this as a "high-value location strategy" and says that his firm could save 40% to 70% on unit labor costs. These labor savings from domestic employee re-location from high to low cost of living cities is a form of a of out-sourcing called near-shoring.

To clarify what Cohn is saying, let's assume a second year Associate making $127,500 re-located from NY to Salt Lake City, UT. According to Payscale's Cost of Living Calculator that equates to $55,589 or a unit labor cost savings to GS of $71,911 for you to be afforded the same standard of living doing the same job! It's simple economics.

Do you agree with Cohn about the cost savings of moving Wall Street jobs out of New York?


Since 2011, a third of all GS hires have gone to Salt Lake City, UT. It's their sixth largest office globally with expanded activities in research and investment management while its New York workforce has remained flat since 2009. Further evidence comes from other bulge bracket firms JP Morgan Chase who is set to send 1,200 employees to Delaware in return for $10.1 million in cash incentives. Deutsche Bank cut 500 jobs since 2009 and since then added 500 in Jacksonville, FL. In the last four years Credit Suisse jobs also declined by but they added 450 in Research Triangle Park, NC and have been given $14 million in incentives. Lastly, the Bank of Mellon cut 250 of its jobs and added 150 to its Lake Mary, FL operations.

What do you think about a Wall Street that's decentralized across the United States?


Unfortunately, for the state of New York there are real economic consequences. The finance industry provided 14% of 2010's tax revenue and for a second year associate the state would be missing $8,336.75 of tax revenue per job. Income loss ex-post taxes is $93,712.47 which depending upon the amount of non-NY expenses is still substantial if we reverse-engineer the money multiplier effect to the local economy. Furthermore, securities industry jobs have fallen by 12% to 191,000 since their peak in 2007 but have been steady at 24% of the nation's share.However,

Places like New York or London will remain financial centers..."

Malick says but with the advent of increasing algorithmic trading, changing market structure and IB decentralization, I suspect the future of a WS career will be much different than the stereotypes of old.

I conclude by asking you monkeys, would you rather work for Wall Street in New York or a lower cost city in the same position and why?

Comments (11)

Jul 15, 2012

People in Front office will not leave NYC. What is it with all these threads?

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Jul 15, 2012
newfirstyear:

People in Front office will not leave NYC.

Done - end of discussion.

Who wrote this shit? Have they ever actually spoken to anyone on the street? No one will ever choose North Carolina over NYC.

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Jul 16, 2012
gammaovertheta:
newfirstyear:

People in Front office will not leave NYC.

Done - end of discussion.

Who wrote this shit? Have they ever actually spoken to anyone on the street? No one will ever choose North Carolina over NYC.

Disagree. Folks in FO roles in Charlotte make street-level comp and live in essentially penthouse condos for $1,200/month. I know a lot of people in the Southeast (most of them have roots here, however), who went to top schools for undergrad and decided to head back down this way instead of to NYC. Granted, there is no guarantee that they had NYC options at the time, but...

Jul 15, 2012

There's nothing wrong with Chicago if it pays the same.

Jul 15, 2012

I think that the more important thing is the cost of the buildings, taxes, etc. more so than the actual cost of employing a person. The MO for CS pays the same in RTP as MS MO pays in NYC. But they don't have to pay for multiple floors/a building in NYC, associated other costs of living in NYC, etc. Plus, $50k in NC is gonna attract better talent than $50k in NYC (if it's money over networking)

Reality hits you hard, bro...

Jul 15, 2012

Id pretty much move anywhere where there's adequate alchohol consumption... so yea Salt Lake City would be out of the equation

GBS

Jul 15, 2012
GoldmanBallSachs:

Id pretty much move anywhere where there's adequate alchohol consumption... so yea Salt Lake City would be out of the equation

Can't do models & bottles if there is no alc.

Robert Clayton Dean: What is happening?
Brill: I blew up the building.
Robert Clayton Dean: Why?
Brill: Because you made a phone call.

Jul 15, 2012
goodL1fe:
GoldmanBallSachs:

Id pretty much move anywhere where there's adequate alchohol consumption... so yea Salt Lake City would be out of the equation

Can't do models & bottles if there is no alc.

Have you seen the girls Mormons produce. They're fucking hot, can cook, and will to get freaky as ef on the promise of marriage. As for the bottles, what about some milk with a little of Kuala in there... or a lot.

Personal wealth is not how much you have in the bank or the worth of your portfolio. But, rather how you've used the wealth to make your life and those around you better.

Jul 15, 2012

I, for one, plan on spending my 20's in NYC but as soon as I get tired with it I'm packing my bags and trading out of somewhere less expensive and more relaxing.

Jul 15, 2012

Not sure about the significance of this post on the site. Most WSO members are looking for FO positions, not the positions that GS is shipping to SLC.

However, I could see regional offices get stronger if many of your typical Wall Street firm's clients decide to significantly reduce their NYC presence in favor of greener pastures in Texas or the Southeast. In the long run it might make significant sense to beef up regional offices or even think about adding new ones for FO bankers.

As for hedge funds, their are plenty based all over. In fact a friend of mine just rolled out of two years as a BB Associate in IB to a West Palm Beach, FL hedge fund.

No state income tax in Florida, boys...

Jul 20, 2012
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