A 23% compounded average annual rate of return.  Not too bad.

During his career Shelby advised Thomas Dewey on economic matters when he ran for president in 1940 and 1944 and served as Governor Dewey’s First Deputy Superintendent of Insurance from 1944 to 1947 in New York. Later, he served as US ambassador to Switzerland under Presidents Nixon and Ford (1969 – 1975).

A philanthropist, he was head of the Shelby Cullom Davis foundation which disperses funds to higher education and to research on public policy and economics. Princeton, his alma mater, was one of the beneficiaries of his grants. He also served as chairman of the Heritage Foundation.

Shelby got around.

But what the heck does this have to do with Fintech?

In a previous post we found that the Tucson, AZ metro area made our top 15 list of top addressable Fintech Securities & Investments markets on a per employee basis in 2015 (ranked 14^th).

Can a contributing reason for this can be tied directly back to Shelby Cullom Davis?

Securities & investments sector in Tucson, AZ

Tucson, AZ probably does not first come to mind when thinking about hot spots of financial activity. So, what is going on in Tucson?

As we have done in previous posts, let’s start with a high-level view of Tucson’s Securities & Investments sector. As shown below, 62% of the 2015 addressable Fintech market is due to portfolio management. Another 27% is due to securities brokerage. This is generally consistent with the West regional average of 28% for securities brokerage we saw in an earlier post. But it reflects a much higher concentration of potential Fintech spend in the portfolio management sub-sector (62 vs 48%).

Again, our analysis uses ZIP Pointe Market Sizer.  Market Sizer is our Tableau-based market sizing tool based on ZIP Code-level Census data on over 7 million private sector business locations.

In terms of business location size by sub-sector, nearly 80% of the locations are small (1 – 4 payroll employees). This is a recurring theme. The sub-sector is dominated by small locations though these are not necessarily all stand-alone companies (i.e. they could be formal branch locations).

There are only 29 locations with 10 or more payroll employees. A bit over 40% of the locations are involved with securities brokerage, another 26% are portfolio management and another 18% are investment advice (see below).

With respect to “hot spots” of potential Fintech spend per employee, it is clearly the portfolio management sub-sector that stands out, with potential spend ranging from $5,337 to $7,682 per payroll employee. The top hot spot consists of 3 locations with 50 to 99 employees.

Note: The US Census source used by Market Sizer tracks only payroll employees. Independent contractors are not reflected in these numbers. Hence, the actual employment level can be higher, possibly much higher, in sectors that make extensive use of contract labor.

ZIP Code level view

As we have done in prior posts, another way to drill into the addressable Fintech market in Tucson is by ZIP code. The following map shows the ZIP codes in the metro area color coded for addressable market size per employee. At the ZIP Code level, addressable Fintech market size ranges from $1k to $6k per payroll employee.

But there is a distinct hot spot in ZIP Code 85706 (circled in red) at $6k per employee. According to Wealthminder.com, the largest Tucson financial advisory firm (in terms of assets under management) is located in this ZIP Code:  Davis Selected Advisors.

Other top firms in the Tucson metro area (indicated by red arrows) are Tci Wealth Advisors in ZIP Code 85718; Sonora Investment Management in Zip Code 85719; Strategic Equity Management in Zip Code 85715; and Sterling Investment Management in Zip Code 85718.

Which ZIP codes account for the bulk of potential Fintech spend?

We have already discussed two of the top 3: 85706 at 16% and 85718 at 20%. But these are surpassed by ZIP Code 85712 (indicated by the green arrow) which accounts for 27%. These three ZIP Codes together account for 63% of Tucson’s potential Fintech spend in the Securities & Investments sub-sector.

Another way to drill into the addressable Fintech market is on a per business location basis.  Dividing potential spend by the number of locations is another way to normalize the data. This map (shown below) looks quite a bit different and one ZIP Code stands out above all the rest: 85706. Although the ZIP code overall accounts for 16% of total potential Fintech spend, on a per location basis, it ranks at the top with $230k in potential spend per site.

ZIP Code 85706

Turns out at there are only 3 locations in ZIP Code 85706.  At least one of these (the larger one) is associated with, yep, Davis Selected Advisors. And it may be that the other sites are also associated with Davis as we could not find any other Securities & Investments firms (with at least 10 employees) in this ZIP Code (If anyone knows, please let us know!)

Davis Selected Advisors

So, the Davis name is a major player in the Tucson metro Securities & Investments sector. Any relation to Shelby Cullom Davis perhaps?

Davis Selected Advisers was started in 1969 in New York by Shelby Davis…not Shelby Cullom Davis but his son Shelby Moore Cullom Davis. Following his father’s footsteps, Shelby M.C. Davis graduated from Princeton and rose through the ranks of the New York financial industry – specifically at the Bank of New York.

In the late 1970s the non-portfolio operations of Davis Selected were moved to Sante Fe, N.M. In 1997, a service center was opened in Tucson and personnel were hired locally and moved from Santa Fe. By 2000, Tucson had became Davis Selected’s global headquarters, specifically in ZIP Code 85706 where the company operates out of its own commercial property.

Today, Davis Selected Advisers is led by Shelby’s son, Chris Shelby, grandson of Shelby Cullom Davis.  “Davis Selected controls the nine-fund Davis group, the Selected group of funds, which is a no-load, four-fund group, private accounts of no less than $5 million, and other managed money programs.” (Inside Tucson Business).  Currently, Davis Selected has about $30b in assets under management.

So, there you have it…from Switzerland to the Sonoran Desert! 

Ok, maybe New York to Arizona…

The post Top 15 Metros – From Switzerland to the Sonoran Desert – Fintech Securities & Investments appeared first on KDD Analytics.

And so will tax incentives.

The Raleigh-Durham-Chapel Hill combined statistical area (CSA), with over 2 million people, is the second largest metro area in North Carolina following Charlotte to the south. It is home to 3 major universities: Duke, University of North Carolina (UNC) and North Carolina State. Duke and UNC form two of the vertices of the “Research Triangle,” an area known for a high concentration of corporate operations and research companies and startups, especially in life sciences. The third vertex is formed by North Carolina State University in Raleigh.

The Raleigh metro area was number two on the 2015 Forbes list of the best place for businesses and careers. Durham ranked number 20 while Charlotte was 14th. Companies located in the Raleigh-Durham area include heavy hitters like IBM, GlaxoSmithKline, Cisco, SAS Institute and Lenovo.

As one of the largest research parks in the world, Research Triangle Park (RTP), sits mostly within the Durham-Chapel Hill metro area. RTP employs nearly 50,000 “high-tech” workers and is home to over 250 companies including Credit Suisse, Dell, EMC and Fidelity Investments. None of these are tobacco companies.

North Carolina has been very aggressive in wooing companies to locate in the state.  Lucrative incentives have been offered including outright grants, rebates of employee withholding taxes and sales tax refunds. Raleigh-Durham-Chapel Hill has directly benefited from these incentive programs as has the Charlotte-Concord-Gastonia metro area.

So, what does this have to do with Fintech?

Two million people and a healthy economy means there’s a lot of money that needs good advice. And a healthy program incentivizing companies to locate in the state doesn’t hurt. This combination has pushed the Durham-Chapel Hill Metro to #6 in our ranking of the Top 15 List of Fintech Securities & Investments Markets on a per employee basis in 2015.

Securities & Investments sector in Durham-Chapel Hill

What does the Securities & Investments sector look like in Durham-Chapel Hill, NC? To start, as shown below, over 50% of the 2015 addressable Fintech market is due to securities brokerage. Another 27% is due to portfolio management. This is generally consistent with the South Atlantic regional average of 45% and 28% that we saw in an earlier post.

Again, our analysis uses ZIP Pointe Market Sizer. Market Sizer is our Tableau-based market sizing tool based on ZIP Code-level Census data on over 7 million private sector business locations.

In terms of business location size by sub-sector, over 70% of the locations are small (1 to 4 payroll employees). There are only 7 locations with 100 or more employees. A bit over 40% of these locations are involved with securities brokerage, another 28% are portfolio management and 19% are investment advice (see below). With respect to “hot spots” of potential Fintech spend per employee, several business locations classified as Miscellaneous Intermediation (e.g. venture capital) have the highest Fintech spend per employee of around $12,000. In the chart below we have circled the largest locations.

Another way to drill into this market is by ZIP code. The following map shows the ZIP codes in the metro area color coded for addressable market size per employee. At the ZIP Code level, addressable Fintech market size ranges from $1k to $6k per employee.

According to Wealthminder.com, the largest financial advisory firms (in terms of assets under management) are located in ZIP Codes 22701 (Amundi Smith Breeden and Verity Asset Management), 27713 (Piedmont Investment Advisors), 27703 (Gordon Asset Management) and 27707 (NCM Capital Management Group).

 

ZIP Code 27709

So, on a per business location basis as well as a total basis, there is a very heavy concentration of potential Fintech spend in ZIP Code 27709. Focusing on the distribution of sites in this ZIP Code we see that the largest locations in the metro area are also in this ZIP Code (see the chart above with the red circle). Since this ZIP Code partially covers Research Triangle Park (RTP), these large locations are likely Credit Suisse and Fidelity Investments (see the RTP company directory).

Note: The US Census source used by Market Sizer tracks only payroll employees. Independent contractors are not reflected in these numbers. Hence, the actual employment level can be higher, possibly much higher, in sectors that make extensive use of contract labor.

Fidelity Investments and JIDGs

Fidelity is one of the larger employers in the Durham-Chapel Hill metro area. Fidelity first began to operate in North Carolina in 2002 “when it acquired an employee benefits business. Four years later, the firm designated North Carolina as a regional technology center, added a data center and a customer contact center and based Fidelity Charitable in the Triangle.” wral.com 

Fidelity further expanded its presence starting in 2006 and in 2015 announced plans to add an additional 600 jobs. Projections are for 4,200 jobs by 2018, mostly at the Research Triangle Park campus.

Fidelity, as well as other business, was likely incentivized to locate and expand in North Carolina by Job Investment Development Grants or JIDGs. These state grants are a

“performance-based, discretionary incentive program that provides cash grants directly to new and expanding companies to help offset the cost of locating or expanding a facility in the state. The amount of the grant is based on a percentage of the personal income tax withholdings associated with the new jobs.” Economic Development Partnership of North Carolina.

Companies can use JIDG funds for any purpose.

As these grants are performance-based, companies receive the full incentive only after meeting certain benchmarks.  These requirements can be in the form of a certain number of jobs created and retained, generation of a targeted $ amount of gross state product and/or the generation of a certain positive net revenue amount over the life of the grant.

Recently, North Carolina has “sweetened the pot” of these incentives, with an eye towards “transformative projects”, those that invest at least $4 billion and create 5,000+ jobs (ahem…listening Amazon?).

All states have some type of incentive program to entice businesses to locate and expand in their states. North Carolina appears to be one of the more aggressive ones. And this definitely was a contributing factor to why the Durham-Chapel Hill, NC metro area is #6 on our list.  #2 Omaha powered its way there more organically it seems.

All regions are different.  And Fintech companies looking to successfully disrupt these segments will need to be able to take these differences into account.

The post Top 15 Metros – Fidelity Durham – Fintech Securities & Investments appeared first on KDD Analytics.

But for those of us old enough to remember, we knew it thanks to Mutual of Omaha’s Wild Kingdom. The show aired on NBC TV just before Walt Disney’s Wonderful World of Color on Sunday nights. Hosted and narrated by zoologist Marlin Perkins, Wild Kingdom featured Jim Fowler showcasing wild animals.

Or maybe you know it for the corn? Nebraska and Iowa have always been synonymous with corn.

But now, Omaha will also be famous for making the Boulder Equity Analytics’ Top 15 List of the Largest Securities & Investments Fintech Markets, ranked by per employee revenue. In fact, as we discussed in an earlier post, it ranked #2 right after the New York metro area.

So, is Omaha’s ranking due to Berkshire Hathaway? Mutual of Omaha? Or maybe it’s companies like TD Ameritrade, Wealthplan, CWM or Securities America? Let’s dig into the data.

Securities & Investments sector in Omaha

What does the Securities & Investments sector look like in the Omaha-Council Bluffs metro area? To start, as shown below, 70% of the 2015 addressable Fintech market is securities brokerage. Another 13% is portfolio management. This is much more skewed towards securities brokerage than the Midwest region overall (36%). So, Omaha is a relative hotbed of securities brokerage business.

Again, our analysis uses ZIP Pointe Market Sizer. Market Sizer is our Tableau-based market sizing tool based on ZIP Code-level Census data on over 7 million private sector business locations.

In terms of business location size by sub-sector, nearly 76% of the locations are small (1 – 4 payroll employees). There are only 10 locations with 100 or more payroll employees. A bit under 40% of the locations are involved with securities brokerage, another 22% are in portfolio management and 24% are in investment advice (see below).

With respect to “hot spots” of potential Fintech spend per employee, business sites with over 20 employees in securities brokerage are at the top. Thirty (30) sites have a potential Fintech spend of at least $6,000 per employee.

 

Another way to drill into the addressable Fintech market in Omaha is by ZIP Code. The following map shows the ZIP Codes in the metro area color coded for addressable market size per employee. At the ZIP Code level, addressable Fintech market size ranges from $1k to $8k per employee.

At the upper end, ZIP Code 68101 shows a per employee value of $8k. There is only 1 site in this ZIP Code and it only has 1-4 employees, in securities brokerage. This is probably a branch office associated with a much larger company. The other 2 top ZIP Codes are 68128 and 68154 with over $6k in potential Fintech spend per employee. We will focus in on them in a bit.

 

However, if we measure addressable market size on a per business location basis (another way to normalize the data), the map looks very different but yields similar conclusions. A shown below, the top ZIP Code in terms of potential Fintech spend per site is 68128 with over $700k.  In second place is ZIP Code 68154 with a total of $126k per site. 

 

But these two ZIP codes are quite different.  ZIP Code 68128 has only 3 sites while ZIP Code 68154 has 81. And in terms of total potential Fintech spend, the ranking is reversed. ZIP Code 68154 accounts for 54% of the addressable Fintech market in Omaha while ZIP Code 68128 accounts for 12%. In third place is ZIP Code 68130 with another 9% in total potential Fintech spend.

A tale of two ZIPS

ZIP Code 68128 has the largest potential Fintech spend per business site at over $700k. But this is due to one large location as shown below (values in the chart are potential Fintech spend per employee). 

Turns out this one large site is the headquarters of Securities America.

We caution that our estimates of potential Fintech spend at a company level are directional. Our Fintech estimates are derived from market aggregates and not from specific company revenue accounts. 

Securities America, founded in 1984, helps financial advisers create more profitable practices. Through a series of acquisitions, the most recent by Ladenburg Thalmann Financial Services, it also offers more traditional services such as equity research, brokerage services and investment banking. On their website, the company says they currently have 575 employees.

We should note that the Census data only track payroll employees. Contractors are not included in these totals. So, the total employee count at any given location could be higher than what is shown here, especially sub-sectors that rely heavily on contracted labor.

ZIP Code 68154 has a much more varied representation of business sites, both in terms of size and in terms of sub-sector, as well as a larger number of sites (81). Securities brokerage accounts for 38% of the business sites with all the large sites (100+ employees) being in this sector. Portfolio management accounts for another 27% of sites and investment advice another 24%.

Wealthplan Partners, who provides financial planning and asset management services, is based in ZIP Code 68154 as is Carson Wealth CWM LLC, another asset management company. Although the representation is more varied, there does appears to be a dominant company in this Zip Code: TD Ameritrade.

TD Ameritrade consolidated employees from around the Omaha metro area into this ZIP Code in 2013. About 2/3 were relocated to the company’s new headquarters building and the remainder in other buildings nearby. At the time, the company says that 2,000 employees were relocated to the ZIP Code.

Amerivest Investment Management, owned by TD Ameritrade and the largest financial advisory firm in Omaha according to Wealthminder.com, is co-located with TD Ameritrade in its ZIP Code 68154 headquarters building.

So what about Berkshire Hathaway and Mutual of Omaha?

Berkshire Hathaway’s headquarters is in ZIP Code 68131 and is not classified as being in the Securities & Investments sector; it is a holding company. Mutual of Omaha is classified as an insurance carrier so is also outside the Securities & Investments sector.

So, the Fintech Securities & Investments market in Omaha is powered by companies in the securities brokerage sub-sector, like TD Ameritrade and Securities America.

But in case you are wondering whatever became of Mutual of Omaha’s Wild Kingdom…it is back on the web with Stephanie Arne hosting.

The post Top 15 Metros – Wild in Omaha – Fintech Securities & Investments appeared first on KDD Analytics.

Previously, we estimated the potential Fintech spend in the Securities & Investments sector to be a little over 16% of the total Fintech market of $18.8b. As of 2015, this was $3.1b.

In our continuing series on the addressable Fintech market we dive deeper into the Securities & Investments sector. Again, our analysis uses ZIP Pointe Market Sizer.  Market Sizer is our Tableau-based market sizing tool. It is based on ZIP Code-level Census data on over 7 million private sector business locations.

Portfolio Management tops the sector

Within the Securities & Investments sector, portfolio management accounts for the largest share of the addressable Fintech market at 38%. Securities brokerage (27%) and investment banking (16%) round out the top 3.

This breakout, though, varies across regions. As shown below, portfolio management companies account for the largest regional share of the market in the Northeast (42%) and the West (48%). In all other regions, securities brokerage accounts for the largest share. Across all regions, portfolio management and securities management together account for 64% to 78% of total potential Fintech spend, respectively.

As shown below, in terms of business location size by sub-sector, 77% of the locations are small (1 – 4 payroll employees). And nearly 94% have fewer than 20 payroll employees. The Census data also indicate that there are nearly 1,200 sites with 100+ employees, representing a bit over 1% of all business sites in the Securities & Investments sector.

We should note that the Census data only track payroll employees. Contractors are not included in these totals. So, the total employee count at any given location could be higher than what is shown here, especially sub-sectors that rely heavily on contracted labor.

In terms of potential Fintech spend per employee, the chart above shows a range of $598 (commodity contracts, 500 to 999 employees) to $7,041 (securities exchanges, 50 to 99 employees). The “hot spots” of potential Fintech spend are in the investment banking sub-sector among sites with 100+ employees, and the securities exchanges sub-sector among sites with 10+ employees (though there are only 36 sites in this sub-sector).

No Surprise, NYC Metro tops area ranking

In terms of total potential Fintech spend, the usual suspects are again at the top of the addressable market list in the Securities & Investments sector. The New York metro area leads the list at $1,090m. Boston $191m, Chicago $183m, Los Angeles $172m, and San Francisco $171m round out the top 5.

But in terms of per employee, San Francisco jumps from #5 to top the list.

In 2015, the top 15 metro areas in terms of addressable Fintech market per employee in the Securities & Investments sector are shown below:

We limited our analysis to metro areas with 150 or more business locations in the Securities & Investments sector. This helps reduce the “noise” in our analysis and minimizes (but does not eliminate) the likelihood that a metro’s normalized estimate is unduly swayed by a few extreme business locations.

Omaha is #2?  There’s a surprise

The San Francisco metro area heads our list of the largest addressable Fintech markets on a per employee basis in the Securities & Investments sector at $5,313. Rounding out the top 5 are Omaha-Council Bluffs, NE-IA ($5,298), Bridgeport-Stamford-Norwalk, CT ($5,122), New York ($5,107) and Worcester, MA ($4,685). Other notables in the top 15 are Durham-Chapel Hill, NC ($4,94), Charlotte-Concord-Gastonia, NC ($3,381), Austin, TX ($3,256) and Tucson, AZ ($3,130).

If you already knew Warren Buffett’s hometown of Omaha, Nebraska was going to be the #2 market in the US for Securities & Investments, give yourself a pat on the back. We’ll break that down for you in future posts, along with two other surprises on the list, Durham-Chapel Hill and Tucson.

This post was written with Tom Marsh, CTO at Boulder Equity Analytics (BEA).

The post Breaking Down the Fintech Securities & Investments Sector appeared first on KDD Analytics.

ZIP Pointe Market Sizer offers a quick and comprehensive way for B2B marketers to estimate the relative potential size of US private sector markets.  Offered as Tableau dashboards, ZIP Pointe Market Sizer is based on the most current US Census data from over 7 million private sector employers.  Users can determine the potential size of B2B markets starting at the state level and then drill down into metropolitan areas and their constituent 5-digit ZIP Codes.

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Ready to try?  Give it spin and let us know what you think.  Access ZIP Pointe Market Sizer here.

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