One of the oldest names on Wall Street is moving to one of the fastest-growing cities in the South, reinforcing a recent shift in finance jobs to cheaper parts of the U.S.
AllianceBernstein Holding LP plans to relocate its headquarters, chief executive and most of its New York staff to Nashville, Tenn., in an attempt to cut costs, according to people familiar with the matter. That largely ends a 51-year presence in the nation’s traditional finance capital.
The move by the money-management giant is part of a broad cost-cutting effort within a firm that for years has been under extreme pressure from the rising popularity of index-tracking funds and low-cost investing.
In a memo to employees, AllianceBernstein cited lower state, city and property taxes compared with the New York metropolitan area among the reasons for the relocation. Nashville’s affordable cost of living, shorter commutes and ability to draw talent were other factors.
Other money managers have also relocated staff to smaller, lower-wage cities that are emerging as unlikely hives of finance. Pacific Investment Management Co. plans to open a new office in Austin, Texas, later this year as part of a push to hire more tech-savvy workers, The Wall Street Journal reported last month. Denver, meanwhile, has been host to a growing number of Charles Schwab Corp. and Fidelity Investments employees.
Wall Street’s migration began after the last financial crisis as banks and money managers looked to trim expenses or take advantage of lower tax rates. Hiring in lower-cost regions can mean millions of dollars in annual savings.
A new tax plan passed last year by Congress also reduced tax breaks that many in the New York region heavily lean on, such as the deductibility of mortgage interest and state and local tax deductions.
Tennessee “is low cost in every respect compared to New York” including housing and transportation, said William Fox, an economist and director of the University of Tennessee’s Boyd Center for Business and Economic Research.
The firm has deep roots in New York. Sanford C. Bernstein got its start in the city in 1967 and grew into a well-known “value”-oriented money manager known for investment research before it was bought by Alliance Capital in 2000.
AllianceBernstein, which manages $550 billion in assets, considered as many as 30 cities as part of its search, according to part of an internal memo seen by the Journal, and analyzed factors such as housing, education, weather and cost of living.
The money-management giant notified staff Tuesday, the people said, and plans to begin shifting employees to the southern city later this year. Its money managers and private client business will remain in New York, while most other functions and the firm’s top leaders including Chief Executive Seth Bernstein shift to the new headquarters.
The Wall Street Journal reported in October that the firm was in talks to shift some staff out of New York and that it considered locations including Charlotte, N.C., and San Antonio, where it already has an office.
AllianceBernstein said the shift was unlikely to improve the firm’s margin until 2020, according to a shareholder letter by Chairman Robert Zoellick and the CEO, Mr. Bernstein, published in the firm’s annual report. It has 3,466 employees globally, according to that report.
The Nashville decision follows a tumultuous year for the company in which its former chief executive and most of its board were ousted by parent insurer AXA SA. The firm was also hard hit by the 2008 financial crisis when bad bets on financial stocks hurt its investment performance.
Peter Kraus, who became chief executive in late 2008 and spent his tenure at the firm trying to reposition it, worked to make the firm less reliant on its stock pickers, reduced some fund fees to make them more competitive and moved into more complicated, high-fee strategies such as hedge funds.
The growth of low-cost index-tracking funds and greater fee sensitivity among investors has put unprecedented pressure on money managers, prompting many firms to slash fees and cut expenses to remain competitive.
Since Mr. Kraus’s ouster a year ago, Mr. Bernstein has been charged with cutting costs and continuing to revitalize the firm. Revenue in the first quarter rose 13% to $867.8 million, while operating income rose 34% to $222.7 million.
Cameron McWhirter contributed to this article.
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