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ScottradeScottrade, an online trading and investment firm, has been based in the St. Louis area for more than 30 years. The company built a 34,000-square-foot data center in West St. Louis County in 2007.
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Courtesy Edward Jones
Edward JonesEdward Jones is one of many financial services companies in St. Louis. Nearly 84,000 St. Louisans work in the financial sector, the seventh largest employment sector in the country.
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Courtesy Wells Fargo
Wells FargoBrokerage firm Wells Fargo Advisors kept its St. Louis location due to the city’s low cost of living and central location.
St. Louis: The New Financial Hub
By Sarah Koci Scheilz
The securities business is booming—just not where it typically has. It’s booming right here in Missouri.
As more traditional hubs struggle, smaller and unexpected cities around the country have emerged in the industry. The 2008 financial crisis contributed to this decline in the customary homes of securities, commodities, asset management, and fiduciary trust companies.
According to a December 13, 2012, Wall Street Journal report, New York City lost 9 percent of its jobs in these areas from January 2007 to September 2012. Los Angeles lost 21 percent of such jobs, and San Francisco lost 17 percent, according to a January report on NewGeography.com. As banks and securities firms struggle to grow, these shifts are the latest sign of cost-cutting.
But these losses spell gains for St. Louis, according to figures compiled by Moody’s Analytics. Securities employment alone expanded by 85 percent in the metro area between January 2007 and September 2012, landing at 12,190 employees this fall.
Why such growth, and why in St. Louis?
“You have to start with the tremendous legacy with these types of firms in St. Louis,” says Steve Johnson, executive vice president of the St. Louis Regional Chamber.
Edward Jones, the financial advising company, is one such company with a legacy. It was founded in St. Louis in 1922, nearly a century ago. The advantages add up from there. Smaller cities offer greater tax incentives and lower wages, which make an impact on the bottom line. New York securities industry employees earn an average of $343,000 per year while their St. Louis counterparts command an average of $102,000. That’s more than 70 percent less.
“It all contributes to a tremendous center of excellence for the industry,” Johnson says.
Today, Edward Jones employs about 12,000 financial advisors in North America and serves nearly seven million clients. “Missouri is a terrific place,” says Jim Weddle, managing partner at Edward Jones. “We’re so lucky that we were originally founded in St. Louis.”
Fortune ranked Edward Jones eighth on its annual “100 Best Companies to Work For” list in February 2013, and that’s the 14th year the firm has made the list. St. Louis’s central location is a major advantage, Weddle says.
“It’s in the middle of the country, so it allows us to serve, on a very convenient basis, both coasts,” he says. “It’s good for the convenience of the central time zone.”
Wells Fargo Advisors is also contributing to the rapid growth in St. Louis. Although the company’s main headquarters are based in San Francisco, management decided to keep the brokerage firm in St. Louis as a major hub following its acquisition of Wachovia Corporation.
For Wells Fargo Advisors, St. Louis continues to be a good fit for doing business.
“St. Louis is centrally located, right in the middle of the country,” says Rachelle Rowe, vice president of external communications. “There are other great financial services companies in St. Louis, so our firm is not alone in the wilderness.”
Rowe also notes the lower cost of doing business.
“The building we have here is two million square feet,” she says. “It’s a great campus, and there’s plenty of room here. The property values and the cost of doing business in St. Louis are better than other parts of the country.”
Wells Fargo Advisors employs about 5,000 employees in the St. Louis region, Rowe says.
The strong presence of local independent brokerages such as Scottrade is another contributing factor to growth. Headquartered in Town and Country, the privately owned discount retail brokerage firm has been based in the St. Louis metro area for more than 30 years and continues to grow.
In 2007, Scottrade built a new 34,000-square-foot data center in the community. Unlike many of its peers, Scottrade did not lay off any of its associates in the recession. In 2008, in spite of the economic turbulence, Scottrade hired 1,000 new associates and opened 75 new branches. It has also made several appearances on Fortune’s “100 Best Companies to Work For” list.
More than 7 percent of the region’s payroll employment work in the financial activities sector at banks, investment firms, insurance companies, or in real estate, the St. Louis Regional Chamber notes. And it’s not just industry leaders who contribute to the financial services presence, Johnson says. There are many smaller investment brokerage firms.
No matter the size of the firm, cost structure and lifestyle attainability contribute to Missouri’s desirability, Johnson adds.
“This is an industry that pays well above the metro average,” he says. “And yet, when put on a national scale, St. Louis is a very affordable market for businesses to grow.” Johnson points to quality schools, a reasonable commute, and many cultural and recreational amenities. “A lot of it comes down to the lifestyle that you can have in a market like this,” Johnson says. “No matter how much money financial sector employees might make in another market, that lifestyle was inaccessible to them because of the cost.”
The financial industry’s growth has been noted at the statehouse as well. The Missouri Senate recently gave first-round approval to economic development legislation designed to spur growth in international trade, data centers, and emerging technology and innovation companies—actions that can benefit the financial industry.
This legislation—Senate Bill 120, sponsored by Sen. Eric Schmitt—aims to provide incentives for businesses that use St. Louis’s Lambert Airport to forward freight internationally. Under the bill, organizations receive tax credits against income tax based on outbound air cargo volume.
Johnson is confident in the role the financial sector plays in taxable income.
“I can assure you it would be a very substantial contributor. They’re very significant generators of wealth for individuals and communities and the state.” And as the St. Louis financial sector grows, the whole state benefits, Johnson says.
“These companies raise the standards of what we expect from kids coming out of Missouri’s schools,” Johnson says.
Even the nonprofit sector of Missouri benefits. “These are the companies that make nonprofit contributions financially and through their people,” he says. “These are the companies that weave the fabric that makes Missouri a great place.”
St. Louis business leaders are focusing their efforts to position the region as a leading off-Wall Street financial center. Jim Weddle, managing partner at Edward Jones, and Danny Ludeman, CEO of Wells Fargo Advisors, are founding co-chairs of a group called the Greater St. Louis Financial Forum. The group includes more than two dozen CEOs from a wide range of Missouri and Illinois companies in financial services ranging from brokerages to banks.
“When you try to get your arms around that, it’s a tremendous group, and we think that bodes so well for St. Louis,” Johnson adds.
Some members are from the information technology sector. “Part of the growth story here in St. Louis also involves those in the IT field,” he says. “There are many areas where IT converges with financial.”
One primary function of the group is company recruitment. Getting the leaders of these firms to visit St. Louis is often the biggest challenge, according to Johnson. But, he says, it’s worth their while to visit.
“If you can get them to take a visit here and spend a couple of days, then let them talk to others who have made a similar move, they’re blown away by the accessibility and lifestyle of our city,” Johnson says.
Members of the Greater St. Louis Financial Forum are frequently from competing companies, but they don’t let that get in the way of progress. Abiding by the mantra that rising tides lift all boats, their collaboration makes the sector stronger.
“You realize that many of them compete against each other every day for clients and for talent, but they really check their swords at the door and come around the table to try to figure out what they can do together for their industry,” Johnson adds. “They really strive to grow this sector.”
Weddle encourages banking, brokerage, and other organizations to consider Missouri as a sound location for business.
“That Midwest work ethic is going to help you get the important work done every day,” Weddle says. “Missouri has just been a great place for us to grow, recruit, attract, and retain the people who can do the work each day.”