Have you heard about the increasing move or “migration” of jobs and corporate headquarters to cities OTHER than New York and San Francisco? Recent reports highlight not just the move of mere jobs but also the move of the CEO and corporate HQ! Several underlying factors including taxes and home affordability are worth considering.

Nashville made a big splash in the world of investment management when Alliance Bernstein announced it was moving its corporate headquarters to Nashville from New York City!
Nashville made a big splash in the world of investment management when Alliance Bernstein announced it was moving its corporate headquarters to Nashville from New York City!

Being a “recently relocated” myself this struck a chord: right before my eyes in the Raleigh-Durham, NC area there have literally sprung up new, shiny – and cool – sizable office sites. The purpose of these new and newly grown sites in several cities in North Carolina has been to reduce overall company costs and taxes,plus other things, for corporate HQs as well as administrative arms of major companies (i.e. MetLife, Fidelity, Bank of America, Cisco, Biogen and more).

Other prominent cities in these moves include: Nashville, TN; Charlotte, NC; and Austin, TX. In the case of Nashville, TN recent news made a big splash in the world of investment management when AllianceBernstein announced it was moving its corporate headquarters, meaning its CEO and over 1,000 staff, to Nashville from New York City! Notable in the case of Tennessee, like Florida*, there is no state income tax. In addition, extremely nice homes can be purchased for literally a fraction of that in New York and New Jersey for a fraction of the property taxes. (No offense intended!)

It is funny how much taxes figure into nearly every inch of our lives. The $10,000 cap on deductions for SALT (State And Local Taxes) poses a major pain in the side of the residents of high SALT states. Also, in the world of investment management, COSTS have become a major, major point of enlightenment for the investing public – and advisers. Full disclosure: Nearly five years ago I made a change and choose to invest a large share of my clients’ monies in funds managed by Dimensional Fund Advisers^ because of their superior quality AND fees are far, far lower – a fraction of expensive, non-index-based funds. Dimensional’s headquarters are in Austin, TX and Santa Monica, CA with their newest major office in… Charlotte, NC.

Note that Vanguard, one of the biggest names in low-cost investing, is located in Malvern, PA since approximately 1975 and likely inspired firms like Dimensional who have an eye toward lowering investor costs while maintaining superior investment quality AND giving better quality of life to their employees. Overall, this is great news for investors and should continue.

Taxes, costs of living and doing business are meaningfully lower out of the fray of the traditional financial centers like New York and San Francisco. And it is starting to matter more meaningfully for major companies, their employees as well as individual investors.

Time for an “unsweet tea, please”!

Seven (7) US states (plus two) do not have a state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. The “plus two” are New Hampshire and Tennessee, who do not tax income except for dividends and income from investments.

Neither I nor my firm receive any incentive whatsoever, financial or otherwise, from Dimensional Fund Advisers to invest in DFA funds. My use of DFA funds was years prior to their new offices opening in Charlotte, NC.

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