Miami: Wall Street South Lures Hedge Funds, Financial Firms

Jan 11 2011 | 10:04am ET

“There’s a running joke, perhaps you’ve heard it,” says Carlos Deupi, president of The Miami Finance Forum, “Why do people like Miami so much? Because it’s so close to the United States.”

Like most jokes, it contains a grain of truth: According to the 2008 U.S. census, 62% of the people in Miami-Dade county are of Hispanic or Latino origin. Many are U.S. born, many others come from the Spanish-speaking countries south of the border—and many of those are businesspeople, attracted as much by the city’s position as a financial hub as by its Hispanic culture.

The result is a city so plugged into the Latin American business scene that AméricaEconomia magazine ranked it number one in its list of the best cities in which to do business in Latin America. (Or rather, ‘las mejores ciudades para hacer negocios en América Latina.’)

Brickell AvenueBrickell AvenueDeupi says the city has the country’s second-largest concentration of domestic and international banks after New York, and if you stroll down Miami’s Brickell Avenue (“Wall Street South”), you’ll find a lot of familiar names: Goldman Sachs, Morgan Stanley, a “real Who’s Who of the financial world.”

Jason Molesworth, COO of the Miami-based hedge fund firm Simplified Asset Management and a partner in the economic consultancy Promocorp Group says part of the secret to Miami’s success as a financial hub is its infrastructure. In addition to the heavy concentration of banks mentioned above, it is also a center for financial support services.

“There are benefits of developing clusters and one of those is shared knowledge,” Molesworth told FINalternatives. “You get a pool of resources that have worked at a Citadel, that have worked at a BlackRock or, at a smaller level, in Miami, at an Everest, an HIG...these are people who have experience working at multi-billion dollar funds...The reality is that there are only a couple of markets where you have broad access to that talent, and it’s really New York and Chicago. Miami is kind of a second-tier market in terms of access to talent, quickly approaching top tier.”

Moreover, he says, Miami has a lot of first-generation American Hispanics who “do a great job of straddling those two cultures and that’s much more common in Miami than it is in Dallas or Austin, or particularly, New York,” although all three cities have sizeable Hispanic populations.

Miami is also distinct from these and other American cities, says Molesworth, by virtue of being “the center for Caribbean-based expats.” So, he says, while Texas, California and Arizona have a lot of primarily Mexican first, second, and third-generation Hispanics, as well as some Latin American Hispanics, Miami is a center for immigrants from the Caribbean and Venezuela.

“One of the interesting stories over the last five to eight years [has been] a massive exodus of Venezuelan-based business owners to Miami,” says Molesworth. “That represents an opportunity to leverage their connections, manage their money—directly here, but also to manage the money of people who are still in Venezuela.”

Miami’s geographical location is an advantage in itself, with direct flights available to Mexico City, Caracas, Buenos Aires, Rio and Sao Paolo, among other Latin American destinations.

And that Florida sunshine doesn’t hurt either.

“If you talk to the hedge fund managers in Florida,” says Deupi, “They’ll tell you...you don’t need to be in New York anymore. A lot of people down here, they’re from New York, Connecticut, they moved down here for a lifestyle change, they like the weather, they like the fact that Miami is a connection point with Latin America and New York. Now, in January, February, a lot of the New York hedge fund managers come down here—they come for conferences, they come on vacations.”
 
Deupi thinks the alternative investment types who move to Miami also appreciate the “independence,” suggesting Miami is less prone to the herd mentality than is New York.

Whatever the attraction, the fact remains that financial types are making their way to Miami—and Deupi doesn’t see this ending anytime soon.

“The finance world is broad-based down here. There’s commercial banking, there’s private wealth, there’s also a lot of alternative investments—hedge funds, private equity, venture capital, other financial alternatives. So, we’re seeing a lot of growth here, the markets have been good and there’s been a lot of job creation down here.”

Deupi’s Miami Financial Forum brings Miami’s financial industry leaders together throughout the year at events¬ both social and educational. To his way of thinking, there’s no reason not to be based in Miami.

“They still see the people and get the traffic,” says Deupi, “but they can work from where they like to be.”

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EVENT: The Search For Alpha In Latin America
February 16 | Miami City Club, Miami
Join FINforums, the conference arm of FINalternatives, as we bring together top experts on the region to discuss the challenges and opportunities of investing in Latin America. Register Now ($200 for half day event, includes lunch, program and cocktail reception).

Speakers Include: David Brillembourg (Brilla Group); Fernando Donayre (INCA Investments); Rainford M. Knight, Ph.D. (Florida Institute of Finance); Antonio Miranda (Compass Group); Jason Molesworth (Simplified Asset Management); Julie Neitzel (GenSpring Family Offices); Alejandro Rojas (Armada Capital); Chair and Moderator: John Seigenthaler (former NBC News anchor, Seigenthaler PR)


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