One of the highest tax rates in the country also means tax advice opportunities are abundant
For Michael Brown, a senior portfolio manager, moving to San Diego was a no-brainer.
“I fell in love with the outdoors, the beach and skiing,” Mr. Brown said. After 15 years of working in New York and Florida, he and his family “started working on our way to get here,” he added.
Ask a number of financial advisers in the area, and you'll hear the same sentiment expressed. The temperature in San Diego stays around 70 degrees all year, and the area has a plethora of beaches.
The pleasant weather is not only relaxing but a big factor in the entrepreneurial spirit that has become a way of life for many California cities.
San Diego is home to many startups. North America's largest personal drone company, 3D Robotics, raised $30 million last year in venture capital. Brightscope helps you find financial advisers and research the quality of your retirement plan. And TakeLessons, which has raised $10.4 million since 2006, connects students with arts teachers and academic tutors for both live and online classes.
“There's a sense of enthusiasm for entrepreneurship here — it's similar in many regards to the Bay Area,” said Carolyn Taylor, president of Weatherly Asset Management in Del Mar, Calif. “You can create something from nothing if you have the right idea, product and service.”
The San Diego startup scene is an opportunity for financial advisers to come forward and help companies manage their cash in the early stages, Mr. Brown said.
Established technology companies like Qualcomm Inc. and a burgeoning biotech industry are also huge targets for wealth management firms.
Mr. Brown's firm, Dowling & Yahnke, has been working with executives at Qualcomm for over 20 years, and the business is looking to expand further into the corporate space.
“The more we can really understand the technology players, the more we can build relationships with their firms and executives,” he said.
The city of San Diego, which has a little over 1.3 million people, also presents certain challenges. More than 40% of the population has obtained a bachelor's degree or higher.
“A lot of [our clients] are more than smart enough to do what we do,” Mr. Brown said. “So we want to be really efficient. Our biggest challenge is being able to tell our story and getting in front of the right people.”
About 145,000 residents are over 65.
“A lot of people from around the country are moving to San Diego to live out the next stage of their lives comfortably,” said Ajay Gupta, founder and principal at Gupta Wealth Management.
Those clients usually have many assets back home and maintain relationships with out-of-state advisers.
“It takes [clients] a long time to transfer trust,” said Mr. Gupta, who moved to San Diego in 2000 after working as an adviser at Merrill Lynch & Co. Inc. in Montreal. He said he fell in love with the dream of living in Southern California.
“It's a beautiful and thriving, diverse economy,” he said.
The charm of San Diego can be distracting if you're the type of person that doesn't like to work, Mr. Gupta added. Coming from an East Coast culture, he doesn't feel that pressure.
But Ms. Taylor sees it a little differently.
'The good weather allows people here to work efficiently but also have a life outside of that business,” she said. “I can actually have a break in the day and do something with my time, and there's not a snowstorm outside.”
San Diego, with a median household income of about $64,000, happens to have one of the highest tax rates in the country — so tax-planning opportunities are abundant for the financial advice industry.
“If you can incorporate intelligent tax strategies in your portfolio management, clients really appreciate that,” Mr. Gupta said.
Clients also appreciate having an adviser to talk with and meet in person, said Ms. Taylor, referring specifically to wealthy people busy with their own lives, families and charities.
“It can be as simple as changing a job or going through a period of transition like a divorce,” she said. “Busy professionals and individuals don't pretend to know everything.”
Many San Diego residents maintain real estate investments — another area for intelligent tax strategies, Mr. Gupta said. According to a recent report by the National Association of Realtors, San Diego has the fifth-most pricey housing market in the U.S., though national year-over-year price appreciation is at its slowest since 2012. The median price for a single-family home in San Diego is $504,200.
The city is also a college town, home to San Diego State University and the University of California, San Diego. UC San Diego had over 30,000 undergraduate and graduate students enrolled last fall, while San Diego State had over 32,000 students.
More than 27% of the population is between 20 and 34. That large pool of young professionals may be looking to financial advisers to manage their money. A new generation of investors also means thinking about the advisory role differently.
“You have to go about it holistically,” Mr. Brown said. “You can't manage money in a vacuum and expect to be a trusted adviser.” He added that his firm sometimes offers simple financial planning at no charge.
Advisers are usually wary of taking on clients in their 20s and 30s, who may have too few assets to justify having someone manage their money. Still, San Diego's younger residents could prove to be big clients in the future if advisory firms can tailor their services and fees to attract this demographic.
“[San Diego] is a really fun and high energy place to live,” Mr. Brown said. “So it attracts a lot of high-talent, very successful people, and there are a lot of opportunities to help them out.”
Esha Ray is a freelance writer.
