For many, Miami is synonymous with tourism and real estate, but it’s actually much more than that. Events such as Art Basel, Emerge, as well as the presence of more than a thousand multinational companies, have allowed us to exhibit ourselves to the world as a city where culture, high-tech development and international trade converge. This positions South Florida as an international business point.
But lately, we’ve started to stand out as a financial center, a Singapore of the Americas. Therefore, it is more than fair to ask: Does Miami really have the substance necessary to be recognized as a financial center? Or is it just pretentious talk?
So far, the case of Miami, as a financial center, has been taken from anecdotal references. New firms have opened their doors here. For example: Scout Ventures, a New York venture capital firm, and Universa Investments, a hedge fund, which moved its headquarters from Southern California to Coconut Grove. However, other firms, such as Canada’s RBC Wealth Management, and Britain’s Lloyds TSB Bank, left the city.
So by anecdotal references, it would be a tie. But let the numbers speak for themselves: How many financial firms do we have in South Florida? The answer to this question, although it sounds simple, ends up being complex. To begin with, financial firms are very diverse, although they have similarities. There are commercial banks, investment banks, hedge funds, investment and real estate mutual funds, asset management firms, private equity, wealth firms, and family offices. Databases, such as IPREO, Pitchbook, Thomson ONE, are a good starting point to analyze this maze, but even they do not agree on how to categorize these financial firms.
And to add to the confusion, some signatures are called differently from how they are described in databases. Having doubts about the type of firm it was, I asked the CEO of a company, Are you a private equity firm, or a family office? The answer was, “We are a hedge fund.” Of course!
Beyond the multiple blurred lines between venture capital and private equity, between family offices and wealth management firms, there are two common characteristics of money: mystery and ego.
On the one hand, South Florida, from Miami to Palm Beach, has always been a magnet of wealth for foreigners, some of whom prefer to go unnoticed. And on the other hand, there are a lot of investment advisors, who would be more than happy to embellish their credentials as investment banks or wealth management managers, to extol their importance.
So, first, we had to recognize that some investment centers run in South Florida evade detection, and second, we have eliminated secondary players by applying minimum standards by including them in the hedge fund account, investment bank account, international bank list, etc.
Still, coming up with exact numbers for the different segments of the financial services industry in South Florida was a complex process.
South Florida is home to 50 community banks, 59 international banks, 60 hedge funds, 63 wealth management firms, 19 private equity firms, 13 investment banks and more than 200 family offices. Add to that several venture capital startups, a $7 billion mutual fund, and more real estate investment funds than we dared to count.
Are these firms enough to think Miami is a financial services hub? By all measures, we would say yes. It doesn’t mean Miami is in the same league as New York. But it definitely deserves to be in the conversation.
This brings us to another question: How does South Florida rank compared to Chicago, San Francisco, Los Angeles, and Houston?
That’s the next challenge. We’ll keep you posted.
Op-ed by Ian McCluskey, Vice President, Newlink Financial Communications
