Wall Street’s seismic shift pushes Dallas past Chicago and LA

Dallas saw three of Wall Street’s biggest banks launch new campuses last year, cementing its commitment to one of the fastest growing urban centers in one of the fastest growing states. The industry’s rapid expansion in Texas since the start of the pandemic means the area now has more financial workers than Chicago or Los Angeles, second only to New York.

And it’s not just the big banks. Asset managers of all sizes have been looking to cash in on the influx of wealth and people moving from the coasts to Dallas for cheaper housing and the absence of state income tax. Fisher Investments moved to suburban Plano from Washington state earlier this year, following asset managers including Charles Schwab and Canyon Partners who arrived a few years earlier.

“Right now, the smart money is in Dallas,” Mayor Eric Johnson said at the October groundbreaking ceremony for Goldman Sachs Group Inc.’s 5,000-person campus in the trendy Victory Park neighborhood near downtown.

The bank expansions help cement the city’s status as the economic mecca of the South, overshadowing competitors like Atlanta and Miami. The rapid migration of people and businesses to Texas has led to a positive cycle of job creation in construction, restaurants and other industries without direct ties to banking.

However, financial workers in Dallas tend to be paid much less than those in New York, even for similar jobs. Financial and investment analysts, for example, average $102,000 per year in Dallas, almost 30% lower than the current rate in New York.

Average wages are also lower due to the types of jobs available. In Texas, a larger share of the staff base is made up of back-office activities such as technology, customer service and loan processing.

However, there are concerns that government policies may slow down the industrial boom. In October 2023, Attorney General Ken Paxton’s office said it was reviewing whether 10 financial firms, including Bank of America Corp. and JPMorgan Chase & Co. violated a Republican-backed law that penalizes companies for limiting work with the oil and gas industry because of climate change. Officials have also been investigating financial firms over a 2021 law restricting public contracts for companies that “discriminate” against arms manufacturers.

In a November 2023 interview with Bloomberg News, JPMorgan Chief Executive Jamie Dimon said the laws risk undermining the state’s business-friendly reputation. Paxton has said that the concerns are exaggerated, and that all companies need to do to avoid the problem is to stay out of politics.

Currently, there are no signs of a slowdown in the Dallas financial sector. Wells Fargo & Co.’s new $500 million campus, which will house 3,000 workers, is coming up in suburban Irving. In November 2023, Bank of America held a groundbreaking ceremony for its 30-story high-rise less than a mile from Goldman’s new campus.

The country’s fourth city, Dallas-Fort Worth, passed Chicago and Los Angeles during the pandemic to become the No. 2 area for finance jobs. It is home to more than 380,000 people working in the industry, according to data from the Bureau of Labor Statistics. That compares with 323,000 in Chicago, the home of CME Group Inc, Cboe and other derivatives companies. Despite the influx of money managers and hedge funds to Miami, it has only 221,000 financial workers.

New York is still number 1, with 809,000 employees in the sector.

Financial companies occupy 28 million square feet of office space in the Dallas area, second only to New York, according to Cushman and Wakefield. Together with the insurance industry, the sector accounts for 12% of all commercial real estate space in Dallas, CoStar data shows.

Dallas benefits from being in the middle of the country, with two airports offering a plethora of direct flights, according to Jennifer Chandler, marketing manager for Bank of America in Dallas. The company has about 14,000 employees in Dallas, with more than half in engineering and operations, Chandler said.

While banks like JPMorgan, Wells Fargo and Bank of America have long had a presence in Texas, the pandemic supercharged growth.

Atalaya Capital Management, a $10 billion alternative investment advisory firm, opened an office in Dallas in 2022, its only location outside of its New York headquarters. Charles Schwab moved to the suburb of Westlake from San Francisco in 2021. Fisher Investments came from Camas, Washington. Canyon Partners, a $24 billion Los Angeles-based fund, opened an office in Dallas in 2021. And KKR & Co. opened a real estate credit office in Dallas last year.

“Covid gave everyone an appreciation for what you can do remotely,” said Ivan Zinn, the founder of Atalaya. “With the growth of asset management, hedge funds, in Dallas in particular, you’ve seen that the talent pool is diffuse.”

Dallas finance executives say the region is full of engineering and technology workers, which is part of the reason they have located so many back-office operations there.

In the coming years, they expect more executive and investment banking positions to be available in Texas. Already, executives like Rick Wurster, a top deputy at Charles Schwab, and Fortress Investments co-CEOs Joshua Pack and Drew McKnight have moved to North Texas. Dallas-based Texas Capital Bank has expanded its business lines in recent years by adding an investment banking division. It launched its first exchange-traded fund in July, focused on Texas.

JPMorgan now has 15 investment bankers based in Dallas, a number that has more than doubled in just a few years.

“There are now CEOs within our business or different business units sitting in Dallas or Plano or Fort Worth running companies with employees all over the world,” said Elaine Agather, president of the Dallas region for JPMorgan. “Before, so much of it was concentrated in New York.”

About the Viking

With Viking’s signals, you have a good chance of finding the winners and selling in time. There are many securities. With Viking’s autopilots or tables, you can sort out the most interesting ETFs, stocks, options, warrants, funds, and so on. Vikingen is one of Sweden’s oldest equity research programs.

Click here to see what Vikingen offers: Detailed comparison – Stock market program for those who want to get even richer (vikingen.se)