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Top Cities for Financial Adviser Startups

CNBC.com

Top Cities for Financial Adviser Startups

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As financial services companies trim payrolls, more industry veterans are opening their own investment firms.According to , which tracks the, there are now 28,574 resident investment adviser, RIA, firms, usually with offices of two to eight employees and an average of $25 million to $50 million in client assets under management, AUM. Others, such as spinoffs from the financial giants, can manage mutual funds and other big accounts, boosting the AUM.In the most recent full year of year of data, 2011, 1,108 RIA firms were formed with $561.38 billion worth of assets under management.We thought it would be interesting to see what cities had the most activity in creating new RIA firms in 2011 and how much money (measured in assets) was under management. (Note that there is a wide range of assets, depending on the individual starting the firm and the number and size of clients.)Here are the top ten cities based on a customized search of AdviceIQ/Meridian-IQ data bases.
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As financial services companies trim payrolls, more industry veterans are opening their own investment firms.

According to AdviceIQ/Meridian-IQ,which tracks the financial adviser industry,there are now 28,574 resident investment adviser (RIA) firms, usually with offices of two to eight employees and an average of $25 million to $50 million in client assets under management (AUM). Others, such as spinoffs from the financial giants, can manage mutual funds and other big accounts, boosting the assets under management.

In the most recent full year of data, 2011, 1,108 RIA firms were formed with $561.38 billion worth of assets under management.

We thought it would be interesting to see which cities had the most activity in creating new RIA firms in 2011 and how much money (measured in assets) was under management. (Note that there is a wide range in the size of AUM, depending on the individual starting the firm and the number and size of clients.)

Here are the top 10 cities based on a customized search of AdviceIQ/Meridian-IQ data bases.

10. (Tie) Stamford, Conn.

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Stamford, Conn.RIAs in 2011: 5AUM in 2011: $5.04 billionRIAs in 2010: 4AUM in 2010: $1.52 billionThis city of about 123,000 is less than an hour from New York City and thus something of a financial satellite. It is also home to many corporations. Connecticut is the unofficial capital of the hedge fund industry and has one of the highest per-capita incomes in the U.S.
Photo: Wikipedia

Stamford, Conn.

RIAs in 2011: 5
AUM in 2011: $5.04 billion

RIAs in 2010: 4
AUM in 2010: $1.52 billion

This city of about 123,000 is less than an hour from New York City and thus something of a financial satellite. It is also home to many corporations. Connecticut is the unofficial capital of the hedge fund industry and has one of the highest per-capita incomes in the U.S.

10. (Tie) San Jose, Calif.

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San Jose, Calif.RIAs in 2011: 5AUM in 2011: $128.0 millionRIAs in 2010: 1AUM in 2010: $130.0 millionOne of the fastest growing major cities in America and the 10th largest in the nation, San Jose is the capital of Silicon Valley, where millionaires are minted on a regular basis. Cisco Systems, among others, is headquartered there. The city’s housing market was one of the hottest during the boom and is currently among the most pricey.
Photo: Bernd Geh | Photographer's Choice | Getty Images

San Jose, Calif.

RIAs in 2011: 5
AUM in 2011: $128 million

RIAs in 2010: 1
AUM in 2010: $130 million

One of the fastest growing major cities in America and the 10th largest in the nation, San Jose is the capital of Silicon Valley, where millionaires are minted on a regular basis. Cisco Systems, among others, is headquartered there. The city’s housing market was one of the hottest during the boom and is currently among the most pricey.

10. (Tie) Rochester, N.Y.

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Rochester, NYRIAs in 2011: 5AUM in 2011: $214.0 millionRIAs in 2010: 1AUM in 2010: $14.0 millionThis medium-sized city in northern New York is home to such big companies as Rochester Kodak, Bausch & Lomb and Xerox and a major scientific research center. It has a diverse economy and top-shelf universities.
Photo: Richard Cummins | Robert Harding World Imagery | Getty Images

Rochester, N.Y.

RIAs in 2011: 5
AUM in 2011: $214 million

RIAs in 2010: 1
AUM in 2010: $14 million

This medium-sized city in northern New York is home to such big companies as Kodak and Bausch & Lomb, plus a major scientific research center. It has a diverse economy and top-shelf universities.

10. (Tie) Columbus, Ohio

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Columbus, OhioRIAs in 2011: 5AUM in 2011: $294.0 millionRIAs in 2010: 1AUM in 2010: $91.0 millionColumbus is the state capital and largest city in Ohio. A number of Fortune 500 companies (Limited Brands) are based in Columbus, as are units of foreign companies such as Siemens. Columbus suffered from the Great Recession less than other major cities, and as a result has relatively low jobless rate of 5.9 percent (August).
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Columbus, Ohio

RIAs in 2011: 5
AUM in 2011: $294 million

RIAs in 2010: 1
AUM in 2010: $91 million

Columbus is the state capital and largest city in Ohio. A number of Fortune 500 companies (Limited Brands) are based in Columbus, as are units of foreign companies such as Siemens. Columbus suffered from the Great Recession less than other major cities, and as a result has a relatively low jobless rate of 5.9 percent (August).

8. (Tie) Omaha, Neb.

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Omaha, Neb.RIAs in 2011: 6AUM in 2011: $619.0 millionRIAs in 2010: 2AUM in 2010: $923.0 millionIt’s unlikely that any RIA in this Nebraskan city is managing the money of Berkshire Hathaway chairman Warren Buffett, but there are plenty of white-collar workers there for potential clients. Food giant ConAgra, Union Pacific railroad, and Mutual of Omaha Insurance are all based there along with Buffett’s holding company. Omaha is experiencing something of a development boom with a number of private and public projects. The city’s jobless rate is 4.2 percent, half the national average.
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Omaha, Neb.

RIAs in 2011: 6
AUM in 2011: $619 million

RIAs in 2010: 2
AUM in 2010: $923 million

It’s unlikely that any RIA in this Nebraskan city is managing the money of Berkshire Hathaway Chairman Warren Buffett, but there are plenty of white collar workers there for potential clients.

Food giant ConAgra, Union Pacific railroad and Mutual of Omaha Insurance are based there, along with Buffett’s holding company. Omaha is experiencing something of a development boom with a number of private and public projects. The city’s jobless rate is 4.2 percent, well below the national average.

8. (Tie) Madison, Wis.

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Madison, Wis.RIAs in 2011: 6AUM in 2011: $1.08 billionRIAs in 2010: 1AUM in 2010: $6.0 millionThe economy of the state capital of Wisconsin has long been dominated by the massive main branch of the state university system, but the health, biotech and advertising sectors are a growing presence. Among the companies there are Spectrum Brands (formerly Rayovac) and TDS Telecom.
Photo: Panoramic Images | Getty Images

Madison, Wis.

RIAs in 2011: 6
AUM in 2011: $1.08 billion

RIAs in 2010: 1
AUM in 2010: $6 million

The economy of the state capital of Wisconsin has long been dominated by the massive main branch of the state university system, but the health, biotech and advertising sectors are a growing presence. Among the companies there are Spectrum Brands (formerly Rayovac) and TDS Telecom.

7. San Antonio

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San AntonioRIAs in 2011: 6AUM in 2011: $89.50 billionRIAs in 2010: 8AUM in 2010: $706.0 millionNow the seventh largest city in the U.S., San Antonio has a diversified economy, with a number of big corporations based there. Valero and Clear Channel Communications are two of the better-known ones. The defense industry also has a large presence.
Photo: Panoramic Images | Getty Images

San Antonio

RIAs in 2011: 6
AUM in 2011: $89.5 billion

RIAs in 2010: 8
AUM in 2010: $706 million

Now the seventh-largest city in the U.S., San Antonio has a diversified economy, with a number of big corporations based there. Valero and Clear Channel Communications are two of the better-known ones. The defense industry also has a large presence.

6. Jacksonville, Fla.

Jacksonville, Fla.

RIAs in 2011: 7
AUM in 2011: $26 million

RIAs in 2010: 1
AUM in 2010: $514 million

Jacksonville is the largest city in Florida (11th in the nation) and a major transportation and trade hub in the southeast region. Railroad CSX, supermarket chain Winn-Dixie and Fidelity National Financial are among the large companies based there.

5. Denver

Denver

RIAs in 2011: 10
AUM in 2011: $5.04 billion

RIAs in 2010: 7
AUM in 2010: $514.0 million

Denver’s central location in the West has made it a distribution and storage hub. Energy and mining are important industries in the area. Molson Coors Brewing and Newmont Mining are two of the city’s big companies. Entrepreneurial success stories Chipotle Mexican Grill, Quizno's, and Smashburger were founded in Denver and are headquartered there.

4. Miami

Miami

RIAs in 2011: 11
AUM in 2011: $1.41 billion

RIAs in 2010: 6
AUM in 2010: $883 million

Miami is a major tourist destination, television production center and port. Dozens of multi-national companies have offices there to handle their Latin American businesses. For the same reason, Miami has also become an international banking center.

3. Boston

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BostonRIAs in 2011: 13AUM in 2011: $75.53 billionRIAs in 2010: 16AUM in 2010: $12.97 billionGiven its status as a major financial center, Boston is a natural home for financial advisers. Mutual fund giant Fidelity Investments is headquartered there, as are a number of venture capital firms.
Photo: Linh H. Nguyen | Flickr | Getty Images

Boston

RIAs in 2011: 13
AUM in 2011: $75.53 billion

RIAs in 2010: 16
AUM in 2010: $12.97 billion

Given its status as a major financial center, Boston is a natural home for financial advisers. Mutual fund giant Fidelity Investments is headquartered there, as are a number of venture capital firms.

2. Houston

Houston, Texas
Michael McCloskey | Photodisc | Getty Images

Houston

RIAs in 2011: 19
AUM in 2011: $11.44 billion

RIAs in 2010: 19
AUM in 2010: $3.92 billion

The largest city in the fast-growing state of Texas no doubt has more than its share of capital looking for a home. Though synonymous with the energy sector, Houston is also a major player in aeronautics, manufacturing, health care and transportation.

1. Chicago

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ChicagoRIAs in 2011: 27AUM in 2011: $4.47 billionRIAs in 2010: 17AUM in 2010: $119.75 billionThe home of the nation’s second largest financial district — not New York City, home to the largest — tops the list, with more than two dozen new RIAs. With a host of major financial exchanges, Chicago has a natural environment for startups.
Photo: Karen Bleier | AFP | Getty Images

Chicago

RIAs in 2011: 27
AUM in 2011: $4.47 billion

RIAs in 2010: 17
AUM in 2010: $119.75 billion

The home of the nation’s second-largest financial district, Chicago — and not New York City, which is home to the largest — tops the list, with more than two dozen new RIAs. With a host of major financial exchanges, Chicago has a natural environment for startups.