NYC Gets Wall Street Rebuke in AllianceBernstein Relocation
(Bloomberg) -- New York is losing more than a thousand financial-industry jobs -- and Manhattan’s loss is Music City’s gain.
AllianceBernstein Holding LP is moving its corporate headquarters and about 1,050 jobs to Nashville, Tennessee, the company said in a filing Wednesday, concluding a months-long search that evaluated 30 cities on attributes including housing, cost of living, education and weather.
While some of the firm’s traditional Wall Street functions -- including portfolio management, sell-side research and trading, and private wealth management -- will stay in New York, workers from finance, legal, sales and marketing teams, among other functions, will start relocating this year. AllianceBernstein Chief Executive Officer Seth Bernstein will join them in Nashville in 2020, according to an internal memo.
“I see Nashville as a game-changer for AB in terms of our ability to source, develop and retain talent, provide a high quality of life for our employees, increase our competitive edge in an increasingly challenging marketplace,” Bernstein said in the memo.
Jonathan Freedman, a spokesman for the asset manager, declined to give additional details about the move, which was first reported by the Wall Street Journal late Tuesday.
Even as JPMorgan Chase & Co. plans a new headquarters on Park Avenue, some big banks and money managers are shifting resources by hundreds or thousands of miles to cheaper U.S. cities. In recent years, Goldman Sachs Group Inc. has built up operations in Salt Lake City, while Deutsche Bank AG has expanded in Jacksonville, Florida. Pacific Investment Management Co. just chose Austin, Texas, for a new office as the asset manager seeks to recruit tech workers and broaden marketing in the U.S.
Last year, relocations contributed to the first decline in New York City’s securities workforce since 2013. That left the industry with about 176,900 people in town, or 6 percent fewer than before the financial crisis, according to the state comptroller’s office. The rest of the private sector grew by 23 percent over the same span.
Money managers are under increasing pressure to reduce their spending as investors focus on low-cost mutual funds and other products. Among actively managed funds, only the most inexpensive are luring new money, the Investment Company Institute said in a report this week. AllianceBernstein has been no exception. In the first quarter of 2018, the firm had net outflows of $2.4 billion.
AllianceBernstein, which manages about $550 billion in assets and has roughly 3,500 employees globally, has been consolidating office space to reduce costs. In an October conference call with investors, the firm said it had vacated a floor at its Midtown headquarters, 1345 Avenue of the Americas, to market it for sublease, a move that was expected to save about $3.6 million a year.
In a statement announcing the Nashville move, the Tennessee Department of Economic & Community Development said that AllianceBernstein will invest more than $70 million to establish its new headquarters. The department expects AllianceBernstein to qualify for the state’s FastTrack program, which offers grants for infrastructure development, job training and discretionary spending, agency spokesman Scott Harrison said.
Judith Byrd, a spokeswoman for Nashville Mayor David Briley, said the city is in discussions with AllianceBernstein about incentives.
Nashville’s population increased 10 percent from 2010 to 2016, to 660,000, Census Bureau data show, as workers flocked to health-care jobs and a nightlife defined by the city’s central role in American country music. In addition to corporate savings, Bernstein cited Nashville’s lower cost of living -- it has no state or city personal income tax -- and the ability to attract nationwide talent as factors driving the decision.
Those selling points could convince other financial firms to leave New York, Dennis Gartman, author of the Gartman Letter, said in a radio interview on “Bloomberg Surveillance” with Tom Keene.
“This is a seminal shift,” Gartman said. “If AllianceBernstein is capable of moving and is going to make the move, others shall follow.”
©2018 Bloomberg L.P.