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My View: How Arizona can catch up with other states as a financial hub

The Phoenix Business Journal

June 11, 2024

 

Conor O'Callaghan is managing director with BTIG and a board member of the AZ Fund Manager Association. He is running as a Democrat for Congress in District 1.

Growing up in Scottsdale, where my family moved in 1988, my outstanding public school teachers set me on the right path for success in life. From Chaparral High School, I went to the University of Pennsylvania, where I earned three degrees, including one from the Wharton School of Business. 

I then embarked on a 15-year career on Wall Street, but ever since my first winter away from home, I desperately wanted to return to Arizona. The problem? In my chosen field of finance, I had virtually no avenue to continue my career ascendency here. 

Historically there was little finance outside New York, Boston, Chicago and San Francisco. But in recent decades, many other cities — Los Angeles, Houston, Atlanta — have joined the party and Phoenix has been left further behind. Quite frankly, cities like Charlotte and Dallas are eating our lunch when it comes to institutional finance, which includes retail and commercial banking, investment banking and asset management. Texas, in fact, has just announced plans to open its own stock exchange to complete with the NYSE and Nasdaq.

The pandemic further accelerated the shift away from the traditional “money centers,” yet unlike cities like Miami or Austin, we were not set up to properly capture that shift.

Even prior to moving back to Arizona in 2020, I linked up with Boots Dunlap to help grow the Arizona Fund Manager Association. What started as a cocktail napkin idea, AFMA and its LIFT AZ conference — LIFT stands for “Local Investment Fund Talent” — has grown into an annual event. We have had bipartisan support from Sen. Mark Kelly, former Vice President Dan Quayle, and former Gov. Doug Ducey, and continue to attract top speakers like Larry Summers each year.

Our approach has been “if we build it, they will come” and to a large degree, it has worked. Smead Capital, which at $6-plus billion in assets under management is the largest investment fund headquartered in Arizona, relocated here from Seattle in the summer of 2020. But by comparison, Newport Beach-based PIMCO is the 10th largest asset manager in the country with $1.8 trillion in assets. So we still have a lot of wood to chop.

Arizona investors need to 'shop local' for a change

How do we continue to build the finance ecosystem here? The industry needs continued political support from both sides of the aisle. We need buy-in from the Arizona Chamber of Commerce and the Arizona Commerce Authority, which is in the works. We need capital allocators, from endowments to state pension funds to ultra-high-net-worth families and individuals, to stop investing all of their money out of state – we need them to “buy local,” if you will. 

And lastly, the Phoenix market needs the finance professionals who are already here to be evangelists for how great of a state Arizona is to start, run and/or grow a business, and raise a family. 

Look at the tremendous success of the CHIPS and Science Act in helping to bring TSMC, a $60 billion project, to the Valley; what I am suggesting, by comparison, is small potatoes. If local leaders can convince finance firms to relocate to Arizona, encourage Arizona-based investors to support both established and emerging local managers, and attract fresh talent to service the influx of deals and wealth that will be created from projects like TSMC, we will be in great shape. 

We’ve already been successful in creating the “Silicon Desert.” Now it’s time to create “The Wall Street of the West.”

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