The Wall Street Journal highlights the financial industry's shift to Northeast Florida in their special "Deutsche Bankers Warm Up to Florida" report. Read more about the features (including trading long subway commutes for surfboards) that they say are drawing "Wall Streeters" to the Jacksonville area!
Deutsche Bankers Warm Up to Florida
In a Shift South, Staff Are Trading Subways for Surfboards...Plus All That Parking
JACKSONVILLE, Fla. — Giving up New York winters in favor of the Florida sun: It isn't just for retirees anymore.
Mr. Drexler, who is in his 40s, is part of a new breed of investment bankers and traders who are working hundreds of miles from the financial industry's historical roots in lower Manhattan.
Deutsche Bank is playing a leading role in Wall Street's transition away from the narrow New York street that is the industry's namesake. It is part of a frenzied cost-cutting effort across the banking industry, where flagging revenues are pinching profits.
Deutsche Bank, the Frankfurt-based lender that is one of the world's largest by assets, is trying to save €4.5 billion ($6.1 billion) annually by 2015. Part of its strategy can be found in a Jacksonville office park, where palm trees were swaying outside on a recent balmy day and where costs, for both the bank and its employees, are a fraction of what they are in New York.
"The new reality is that you do most of your work by phone. Why can't we do that in a location with a better cost of living?" asks Mr. Drexler, who heads the investment-banking operation in Jacksonville. Life in Florida has its conveniences. For one, commuting is less of a hassle. Another perk, Mr. Drexler says, is that you can drive-through anything from Starbucks to the dry cleaners, and there is valet parking even at the movie theater.
In addition to Deutsche Bank, companies such as Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. are moving operations to "near shore" locations in the U.S.—ones that are relatively close to existing financial hubs. It is a compromise between the high costs in cities like New York and the bargain-basement prices for sending work to foreign countries such as India.
While banks have outsourced back-office Wall Street jobs for years, Deutsche Bank is moving actual bankers and traders to its near-shore trading desks.
Deutsche Bank's efforts, which also include moving London-based employees to Birmingham, England, will eventually involve about 8,000 jobs, according to Chief Financial Officer Stefan Krause . He said in an interview that those locations will be about 30% cheaper than if the same jobs were based in New York or London.
"We are moving out, and Jacksonville is the approach we've taken in the U.S.," he said. "There's a bigger overlap on time zones, as communication needs to still happen between offices, and it's easier to travel" compared with more traditional offshore locations, he added.
The Jacksonville project accelerated last year after co-CEOs Anshu Jain and Jürgen Fitschen announced their new strategy for the bank.
In June, Florida's Gov. Rick Scott came to the Jacksonville campus to announce that the bank was expanding its investment-banking division further, with a promised 300 jobs and $10 million to be invested at the site over the next three years.
The bank also has received economic incentives from the state and city for the campus and the jobs. According to Florida's Department of Economic Opportunity website, the state has contributed $3.2 million toward the Jacksonville operations, with a maximum potential state investment of $7.4 million.
From the Jacksonville campus, it is a 15-minute drive to the beach and to downtown, and a two-hour flight to New York.
The campus handles about 1,500 client relationships for the investment bank and employs about 200 investment bankers. By the end of the year, 40 bankers will work for the bank's asset- and wealth-management division there.
Goldman Sachs has set up a similar campus in Utah and often recruits students from some of the same Southern universities. "We say beaches and surfing, they say skiing and mountains," Mr. Drexler says.
Mr. Drexler lives in nearby Atlantic Beach, a 15-minute commute—similar to his previous commute while living in New York. He surfs about once a week and says his cost of living is about 40% of what it was in New York.
Jacksonville doesn't usually rank very high on lists of destination cities in the Southeast for new graduates from the region, in part because it isn't a big industrial or financial hub. It also can be a hard sell to New York-based traders, who aren't sure they can give up big-city living.
But many have embraced it. Ryan Horvath , who graduated from Virginia's College of William & Mary in 2008, chose to accept a job as an analyst with the commercial real-estate team in Jacksonville.
He was recently asked by his group to transfer to New York and declined, preferring the Florida lifestyle.
"I'm in constant contact with the desk in New York" and able to travel there easily, he says. Another perk? He and a group of colleagues often head out to surf before or after work.
Priya Desai , a vice president in the institutional-client group who is in her mid-30s, says she applied for a job in Jacksonville last year after working at J.P. Morgan and Lehman Brothers in New York and making a stopover in London.
"The first time I visited Jacksonville was at the interview, and the first thing I thought was, 'It's so green, and it's so clean,'" Ms. Desai says. She leased an apartment a mile from work and now has a seven-minute door-to-door commute, versus 45 minutes in New York.
While she did take a cut in salary in exchange for the lower cost of living, her net paycheck is almost the same, she says, due to the lower tax rate. (Florida has no personal income tax, while both New York city and state do.) She pays 25% of what she used to pay in rent for a bigger apartment in a complex with a pool. She still travels to New York frequently to meet with clients and supervisors.
"Jacksonville is perfect. I love the vibe and the entrepreneurial spirit of the desk here," she says. "Florida has been a fantastic experience."
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Distance from Jacksonville, Fla., office to key locales:
10 Miles: The rolling waves in Atlantic Beach, Fla. The Florida Times-Union/Associated Press
840 Miles: New York office in downtown Manhattan Reuters
4,661 Miles: Corporate superiors in Frankfurt headquarters Bloomberg News