Securities Firms Find A New Haven In ConnecticutTim Smart
Donald E. Weeden has always been something of a maverick. In the 1970s, he led the crusade against fixed brokerage commissions and advocated more automation on Wall Street. Today, Weeden remains ahead of the pack. He moved his institutional brokerage firm, Weeden & Co., out of the city of high taxes and high stress and last month set up a state-of-the-art trading floor in Greenwich, Conn. Says Weeden: "The sense or feel of the market is as good here as it was in our office on Maiden Lane."
Weeden's recent move to the Nutmeg State is being duplicated by many firms and individuals who find that modern technology can replicate the complex trading and research operations they once thought could exist only in Manhattan. The exodus is making the Greenwich-Westport rail corridor the largest cluster of finance firms outside a major city in America--dozens of companies located in quaint, restored houses and shiny, low-slung office buildings. And it may help explain why there's been a glut of office space in Manhattan's financial district.
"AN AMAZING PLUS." The list of recent arrivals includes some heavyweights: the $1 billion hedge fund Ardsley Partners; Mutual Life of Canada's TMG Financial Products, a derivatives shop; former Kidder Peabody investment banking head Scott C. Newquist, whose Advisory Capital Partners is a venture-capital and buyout firm; and former Federal Reserve Board Vice-Chairman David W. Mullins Jr., who joined Long-Term Capital Management, a bond-trading firm. "Today's communications systems are so incredible you don't have to be in Manhattan," says former Citicorp Chief Economist Leif H. Olsen, who manages about $70 million from an office five minutes from his New Canaan home.
The newcomers join a plethora of traditional corporate-finance outfits long established in the area. In Stamford, GE Capital Services Inc., with $211 billion in assets, is one of the country's largest financial-services companies, while General Re Corp., with $14 billion in assets, is the leader among several Stamford-based reinsurance firms. All told, employment in the finance sector has risen steadily in the region, from 9,040 in 1982 to 19,700 last year. Moving to Connecticut, says Roger Prichard, chief financial officer of TMG Financial Products, has been "an amazing plus" in luring talented professionals.
A big reason for Connecticut's growth is simply financial. The combined federal and state income tax rates for top-bracket taxpayers is 38.9% in Connecticut, vs. 43.9% in New York City. By moving out, partnerships can also avoid New York City's tax on unincorporated businesses. Wages for support staff are also lower, as are most operating expenses.
But for many financial types fleeing the city, the lures are less tangible. Alan H. Dorsey, research director for Value Investing Partners, an institutional brokerage that moved to Westport in 1992, says he can think more clearly outside of the hubbub of Manhattan. "Analytically, it's night and day," says Dorsey. Others report that with less time commuting, there's more time for reading financial statements, poring over research reports, and just pondering the markets. "I think I am more efficient and focused than I've ever been in a 12-year Wall Street career," says C. Michael Vaughn, a principal in Credit, Research & Trading Corp., which spe- cializes in junk bonds.
GOLF SHIRTS. And the lifestyle is more leisurely. Mike P. Goodbody, executive vice-president at Greenwich Partners Inc., which trades lesser-rated muni bonds, says that on a recent afternoon, one-third of his staff was out playing golf. "Believe me, that would never have happened at Morgan Stanley," he says. Office attire tends to be comfortably casual: Traders buy and sell millions of dollars in securities while clad in shorts and golf shirts.
Some expats, however, miss Wall Street's vast, tight-knit nexus of financial professionals, which provides quick, easy access to prospective customers and the latest market intelligence. In Connecticut, everyone generally heads home after work instead of to a watering hole. But a closer sense of community is developing. Charles L. Glazer, whose institutional brokerage was an early pioneer when it set up shop in Greenwich in 1981, organizes occasional group lunches. "You kind of have a quorum now, if you will," he says.
So far, there's been no move to Connecticut by a big Wall Street firm, and the exodus of the boutiques has not caused major damage to Manhattan real estate. Two years ago, Morgan Stanley & Co. considered moving to Stamford but decided to stay put when the Big Apple came up with an incentive package to match Connecticut's. But even if the major firms stay in Manhattan, the steady stream of Wall Street refugees is expected to continue--and help secure a place for southwestern Connecticut on the map of the world's financial centers.
Tim Smart in Greenwich, Conn.