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The Lure Of The Lone Star State

Ben Sullivan looked like a young man with a bright professional future when I recruited him nine years ago to join our staff in Scarsdale, New York. To get him to come aboard, I had to promise not to keep him there.

Ben grew up in New Jersey but headed south for college. He was attending Tulane University in New Orleans when Hurricane Katrina trashed the city in August 2005. Ben completed the first half of his senior year at Southern Methodist University in Dallas before returning to New Orleans for his final semester and graduation.

He moved back to the Northeast after college but, not being the sort to be deterred by a little wind and water, Ben still wanted to eventually make his home in the South. Since our mutual goal was to have him build a long career at Palisades Hudson, we had to come to a meeting of the minds.

Back in 2007, we had only two offices: the Scarsdale headquarters and a branch in Fort Lauderdale, Florida. We wanted to expand, but first, as I explained to Ben, we needed to beef up our client service team in the Northeast. I asked him to join our staff in Scarsdale, become a client service manager — a process that typically takes about four years — then stick around to train additional staff behind him. Then we would find him a new place elsewhere.

We kept our bargain. Ben became a client service manager in Scarsdale in 2010, then helped to train Laurie Samay to follow in his footsteps. Once Laurie was promoted this fall, I was ready to let Ben open a new office.

We mutually decided that that office would be in Austin, Texas, where Ben set up shop last month. His front-page story in this issue of Sentinel discusses some of the tax advantages he enjoys as a resident of Texas compared with his former home in Manhattan. The company also stands to benefit from having a young manager build our presence in one of the country’s most economically vibrant states and its dynamic, tech-savvy capital city.

Austin is our fifth office. In addition to Scarsdale and Fort Lauderdale, today we have client service professionals in Atlanta and in Portland, Oregon. (Aline Pitney, a member of our administrative staff, works from home in suburban Denver, but we do not have an office in the Rocky Mountain states — yet.)

Ben’s move reflects a trend that has long been apparent within our firm and in the nation. Of a total Palisades Hudson staff of 25, seven have transferred from a New York base to the South or West, and two more moved from the Northeast directly when they joined one of our firm’s Southern offices. Conversely, the total who have transferred or moved from a Sun Belt state to work in New York stands at zero.

Between 2010 and 2014, Texas ranked second among the states in population growth, trailing only North Dakota (and the District of Columbia). Florida ranked fifth, behind those two states, Colorado and Utah. And while Georgia did not make the top 10, its population exceeded 10 million in that period, and its overall 4.2 percent increase in the first half of this decade was well ahead of the national average of 3.3 percent. In total population, Texas solidified its No. 2 ranking behind California, while in 2013, Florida overtook New York to move into third place.

Back in New York, residents have been escaping in droves. The state led the nation in domestic out-migration in the first half of this decade, losing nearly half a million residents. But the loss was offset by immigration from abroad, giving the Empire State a net gain of about 368,000 residents. New York’s overall population increase of 1.9 percent was below the national average, but better than those of nearby New Jersey (1.7 percent) and Connecticut (0.6 percent).

The drivers are not hard to discern. Besides the tax issues Ben mentions, housing and other living costs are significantly lower in most of the country than they are in the New York metropolitan region. Austin in particular has become a mecca for young adults, but many cities in Texas, Florida and elsewhere offer career opportunities and living standards that are difficult to match in the Northeast. Warmer climates are also a draw, especially for aging baby boomers, but this is not as important a factor in where our relatively young employees prefer to live.

Our clients are widely dispersed across the country and abroad. We travel regularly to see them; apart from those visits, they generally do not care where we do our work. It would not be reasonable to charge them more for work done by a staff member in New York who has the same skills and experience as a colleague in, say, Atlanta. Since we charge clients the same, we pay employees the same, regardless of where they live and work. So it makes sense that, except for employees who prefer to stay in the Northeast for family or other personal reasons, our staff will tend to migrate to places with lower costs and higher living standards.

After 23 years in business, our firm has seen its growth reflected in the growth of our people. Ben has gone from a rookie staffer to the manager responsible for bringing us into a new region. Laurie and her Atlanta colleague, Thomas Walsh, joined the manager ranks in our client service team in November, and Cristina Galante became our administrative manager in charge of facilities as of this month. (Cristina remains in New York, her home state.)

As always, our success rests on the support we continue to receive from our clients and friends. We all thank you, and wish you prosperity and happiness in the year to come.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book Looking Ahead: Life, Family, Wealth and Business After 55.